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Employers'  Liability 
Insurance 


Report  of  Committee 

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National  Metal  Trades  Association 


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April  12  and  13,  1911 


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CLEVELAND 


We,    the    Committee    on    Employers*    Liability    Insurance, 
respectfully  submit  the  following  report  for  your  consideration. 

William  Butterworth.  Chairman 
Deere  &  Co.,  Moline,  111. 

Geo.  F.  Steedman 

Curtis  &  Co.  Mfg.  Co.,  St.  Louis 

Henry  D.  Sharpe 

Brown  &  Sharpe  Mfg.  Co., 
Providence,  R.  I. 

COMMITTEE 


Digitized  by  the  Internet  Archive 

in  2008  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/employersliabilityOOnatirich 


[5]  .   .^i..:  ; 

To  Members  of  National  Metal  Trades  Association. 
Gentlemen: 

While  the  question  of  systematic  compensation  for  indus- 
trial accidents  has  been  the  subject  of  consideration  and  legisla- 
tive action  by  most  civilized  states  since  1884  when  the  matter 
was  first  treated  by  Germany,  the  subject  but  recently  has  been 
under  consideration  in  the  United  States.  At  the  present  time 
systematic  compensation  is  widely  discussed,  and  has  been  or  is 
being  investigated  by  Commissions  in  Wisconsin,  New  York, 
Minnesota,  Ohio,  Massachusetts,  New  Jersey  and  Illinois,  and 
by  labor  bureaus,  trade  unions,  and  other  organizations. 

Although  the  subject  of  systematic  compensation  has 
attracted  little  attention  in  this  country  until  quite  recently,  the 
subject  of  the  legal  relation  of  Employer  and  Employe,  or  Mas- 
ter and  Servant,  has  not  escaped  attention  in  this  country.  All 
legislation,  however,  either  federal  or  state,  excepting  as  herein- 
after noted,  has  been  directed  along  two  lines,  viz: 

(a)  Legislation  requiring  safety  appliances  for  the  pro- 
tection of  the  Employe,  or  requiring  regulations,  sanitary  or  oth- 
erwise, to  improve  the  working  conditions  of  the  Servant  and  to 
safeguard  his  health. 

(b)  Legislation  modifying  the  existing  rules  of  law  with 
reference  to  the  liability  of  the  Master  for  injuries  to  his 
Servant. 

In  addition  to  the  consideration  of  the  subject  which  has 
been  given  by  legislative  bodies,  in  more  recent  years,  many  em- 
ployers of  labor  have  given  the  question  careful  study  and  deep 
thought  with  the  result  that  in  numerous  instances,  either  through 
voluntary  arrangement  on  the  part  of  the  employer  or  by  co- 
operation between  the  employer  and  employe,  benefit  systems 
have  been  established  by  means  of  which  some  compensation  is 
made,  out  of  a  special  fund,  in  case  of  the  injury  or  death  of  an 
employe,  without  regard  to  negligence  on  the  part  of  the  employer 
as  the  basis  of  the  right  to  compensation. 

The  present  system  of  compensation  for  industrial  accidents 
is  now  conceded  to  be  unjust,  inadequate,  unsatisfactory  and 
wasteful.      It  is  proper,  therefore,  to  consider  what  the  present 


i  . 


.-%  2  2_*:  «':.%••«" 


♦  -  ••  » •' :  «.•    :.!:.•  9*4.  ^  .  [6] 


system  is  and  then  to  consider  and  suggest  a  remedy  which  will 
be  equitable  and  just  both  to  the  employer  of  labor  and  his 
employe. 

RELATION  OF  MASTER  AND  SERVANT 

Under  the  law.  the  liability  of  the  master  for  injury  to  his 
servant  and  the  right  of  the  servant  for  compensation  for  his 
injury  is  found  in  the  common  law,  except  so  far  as  the  common 
law  has  been  modified  by  some  recent  legislation  directed  especially 
to  the  safeguarding  of  employes,  in  certain  industries,  or  to  the 
certain  modification  of  rules  of  practice  by  which  the  remedy  is 
applied  in  the  courts. 

The  legislature  of  Illinois  in  1874  provided  by  statute  that 
**the  common  law  of  England,  so  far  as  the  same  is  applicable 
and  of  a  general  nature,  and  all  statutes  or  acts  of  the  British  par- 
liament made  in  aid  thereof,  and  to  supply  the  defects  of  the  com- 
mon law  *  *  *  and  which  are  of  a  general  nature  and 
not  local  to  that  kingdom  shall  be  the  rule  of  decision,  and  shall 
be  considered  of  full  force  until  repealed  by  legislative  authority." 

One  of  the  "defects**  of  the  common  law,  early  to  be  recog- 
nized, both  in  England  and  in  this  country,  was  the  fact  that 
where  injuries  resulted  in  death  no  right  of  action  therefor  survived 
to  the  widow,  next  of  kin  or  the  legal  representative  of  the 
decedent,  and  so  now  in  this  state  by  statute  it  is  provided  that 
in  such  cases  the  right  of  action  shall  survive  to  the  legal  repre- 
sentative of  the  decedent  for  the  benefit  of  the  widow  and  next 
of  kin.  Like  legislation  has  been  enacted  in  every  state  in  the 
union. 

The  sole  right  which  the  employe  has  to  compensation  from 
his  employer  for  his  injury  under  the  law  of  this  state  is  that  which 
is  given  him  by  the  common  law,  with  the  single  exception  found 
in  the  act  relating  to  mines  and  mining,  and  no  other  remedy  in 
case  of  accident  resulting  in  death  is  afforded  save  under  the 
statutes  above  mentioned. 

Under  the  common  law  (which  is  found  only  in  the  deci- 
sions of  the  courts),  and  under  the  statutes  above  mentioned,  the 
liability  of  the  employer  for  injury  to  his  employe,  and  the  right 


[7] 

of  the  employe  for  compensation  for  such  injury  are  controlled 
by  certain  rules  which  in  substance  are  as  follows : — 

The  contract  of  employment  whether  oral  or  written  car- 
ries with  it  these  obligations: — 

On  the  part  of  the  employer  that  he  will  use  due 
care  to  furnish  to  the  employe — 

(a)  a  safe  place  to  work, 

(b)  safe  machinery,   tools  or  appliances  with 

which  to  work, 

(c)  reasonably  competent  servants  to  assist  in 

the  work, 

and  that  upon  default  of  the  employer  in  the  observ- 
ance of  any  one  of  the  duties  enumerated  above,  injury 
therefrom  resulting  to  the  servant,  while  the  servant 
was  himself  in  the  exercise  of  due  care  for  his  own 
safety,  compensation  shall  be  made  to  the  servant  by 
the  employer  for  such  injury. 

On  the  part  of  the  employe  or  servant,  the  con- 
tract implies  that  he  will  assume  the  ordinary  risks  inci- 
dent to  the  service  which  he  engages  to  perform,  includ- 
ing risk  of  injury  from  the  negligence  of  his  fellow 
servants,  and  that  he  himself  will  use  reasonable  care 
to  avoid  injury. 

It  will  be  observed  from  the  brief  summary  above  that 
the  sole  basis  of  recovery  by  the  servant  for  injuries  received  is 
the  negligence  of  the  master  in  failure  in  one  of  the  duties  on  his 
part  incident  to  the  contract  of  hiring. 

It  will  also  be  observed  from  the  summary  that  it  is  not 
universally  true  that  where  the  master  is  guilty  of  negligence  the 
servant  can  recover  compensation,  for,  if  the  master  be  guilty  of 
negligence,  and  at  the  time  of  the  injury  to  the  servant  he  himself 
was  not  in  the  exercise  of  due  care  for  his  own  safety  (such  care 
as  an  ordinarily  prudent  man  would  exercise  for  his  own  safety 
under  the  same  or  like  circumstances),  or  was  guilty  himself  of 
negligence,  and  such  want  of  due  care,  or  his  own  negligence  con- 
tributed in  the  slightest  degree  to  the  injury,  the  servant  forfeits 
his  right  to  compensation  to  the  master,  notwithstanding  the  mas- 
ter*s  negligence. 


[8] 

The  usual  defenses  available  to  the  master  to  defeat  the 
claims  of  the  servant  for  injury  alleged  to  result  from  the  mas- 
ter's negligence  are: — 

( 1 )  That  the  injury  was  the  result  of  the  neg- 
*  ligence  of  a  fellow  servant, 

(2)  That  the  injury  was  one  of  the  risks  which 

the  servant  had  assumed  as  incident  to 
the  employment, 

(3)  That  the  servant  was  not  in  the  exercise  of 

due  care  or  was  guilty  of  contributory 
negligence. 

These  defenses  have  come  commonly  to  be  called  **the  fel- 
low servant  rule,*'  "assumption  of  risk"  and  "contributory  negli- 
gence.*' 

While  it  would  appear  from  the  above  brief  statement  that 
the  determination  of  the  rights  of  the  servant  and  the  liability  of 
the  master  was  a  comparatively  simple  process,  the  contrary  is 
unfortunately  the  case.  The  application  of  the  law  involves  the 
consideration  of  questions  of  both  law  and  fact  which  has  unavoid- 
ably resulted  in  great  confusion  to  the  end  that  neither  party  to 
a  controversy  is  able  to  foretell  the  outcome  of  a  lawsuit  involving 
his  right  to  recovery  or  liability  for  damages. 

THE  FELLOW  SERVANT  RULE 

Without  going  into  a  minute  discussion  of  the  development 
of  "the  fellow  servant  rule**  it  appears  that  this  doctrine  had  its 
first  application  in  England  in  1837  in  the  case  of  Priestly  v. 
Fowler  in  the  English  Court  of  Exchequer. 

The  case  involved  the  liability  of  the  master,  who  was  a 
butcher,  for  damages  to  his  servant,  by  reason  of  his  injury  in 
unloading  a  wagon  which  had  been  carelessly  and  improperly 
loaded  by  another  servant  of  the  master.  In  deciding  this  case. 
Lord  Abinger  said: — 

It  is  admitted  that  there  is  no  precedent  for  the 
present  action  by  a  servant  against  a  master.  We  are, 
therefore,  to  decide  the  question  upon  general  prin- 
ciples, and  in  doing  so  we  are  at  liberty  to  look  at  the 
consequences  of  a  decision  the  one  way  or  the  other. 


[9] 

If  the  master  be  liable  to  the  servant  in  this  action 
the  principle  of  that  liabihty  will  be  found  to  carry  us 
to  an  alarming  extent.  He  who  is  responsible  by  his 
general  duty,  or  by  the  terms  of  his  contract  for  all 
the  consequences  of  negligence  in  a  matter  in  which  he 
is  the  principal,  is  responsible  for  the  negligence  of  all 
his  inferior  agents.  If  the  owner  of  the  carriage  is 
therefore  responsible  for  the  sufficiency  of  his  carriage 
to  his  servant,  he  is  responsible  for  the  negligence  of  his 
coachmaker,  or  his  harnessmaker  or  his  coachman.  The 
footman,  therefore,  who  rides  behind  the  carriage,  may 
have  an  action  against  his  master  for  a  defect  in  the 
carriage,  owing  to  the  negligence  of  the  coachmaker, 
or  for  a  defect  in  the  harness,  arising  from  the  negli- 
gence of  the  harnessmaker,  or  for  drunkenness,  negli- 
gence or  want  of  skill  in  the  coachman;  nor,  is  there 
any  reason  why  that  principle  should  not,  if  applic- 
able in  this  class  of  events,  extend  to  many  others.  The 
master,  for  example,  would  be  liable  to  the  servant  for 
the  negligence  of  the  chambermaid  for  putting  him  into 
a  damp  bed ;  for  that  of  the  upholsterer  for  sending  him 
a  crazy  bedstead,  whereby  he  was  made  to  fall  down 
while  asleep  and  injure  himself;  for  the  negligence  of 
the  cook  in  not  properly  cleaning  the  copper  vessels 
used  in  the  kitchen;  of  the  butcher,  in  supplying  the 
family  with  meat  of  a  quality  injurious  to  the  health; 
of  a  builder  for  a  defect  in  the  foundation  of  the  house, 
whereby  it  fell  and  injured  both  the  master  and  the 
servant  by  the  ruins. 

The  inconvenience,  not  to  say  the  absurdity  of 
these  consequences  afford  a  sufficient  argument  against 
the  application  of  this  principle  to  the  present  case. 
But,  in  truth,  the  mere  relation  of  the  master  and  the 
servant  never  can  imply  an  obligation  on  the  part  of 
the  master  to  take  more  care  of  the  servant  than  he 
may  reasonably  be  expected  to  do  of  himself.  He  is 
no  doubt  bound  to  provide  for  the  safety  of  his  servant, 
in  the  course  of  his  employment,  to  the  best  of  his 
judgment,  information  and  beHef.  The  servant  is  not 
bound  to  risk  his  safety  in  the  service  of  his  master, 
and  may,  if  he  thinks  fit,  decline  any  service  in  which 
he  reasonably  apprehends  injury  to  himself ;  and  in  most 
of  the  cases  in  which  danger  may  be  incurred,  if  not  all, 
he  is  just  as  likely  to  be  acquainted  with  the  probability 
and  extent  of  it  as  the  master. 


[10] 

The  doctrine  thus  announced  in  this  case  is  much  broader 
than  that  which  is  recognized  as  the  law  in  this  state  (IlHnois). 

The  law  has  been  so  modified  that  in  order  that  the  mas- 
ter be  relieved  from  liability  for  the  injury  of  one  servant  by 
reason  of  the  negligence  of  another  servant  the  two  servants  must 
at  the  time  of  the  injury  have  been  directly  co-operating  with  each 
other  in  the  same  line  of  employment,  and  their  duties  must  have 
been  such  as  to  bring  them  into  habitual  association,  so  that  they 
might  exercise  a  mutual  influence  upon  each  other  promotive  of 
proper  caution. 

This  rule,  however,  cannot  be  invoked  in  defense  of  the  mas- 
ter where  the  negligence  charged  is  a  violation  of  his  duty  to  use 
due  care  to  furnish  a  reasonably  competent  servant  to  assist  in  the 
work.  In  other  words,  the  master  cannot  negligently  employ  an 
incompetent  servant  and  then  claim  immunity  from  liability  for 
the  incompetent  servant's  negligence  under  **the  fellow  servant 
rule.** 

It  is  also  firmly  established  in  the  law  that  the  master  will 
obtain  no  relief  from  liability  under  *'the  fellow  servant  rule*'  where 
the  injury  is  the  result  of  any  negligence  on  the  part  of  the  master 
by  reason  of  his  default  in  any  of  his  duties  to  the  servant  implied 
in  the  contract  of  employment  even  though  the  negligence  of  the 
fellow  servant  may  have  contributed  to  the  injury. 

ASSUMPTION  OF  RISK 

Tlie  principle  of  "the  assumption  of  risk**  as  recognized  by 
the  law  is  that  every  risk  which  an  employment  still  involves 
after  a  master  has  performed  his  full  duty  to  his  servant  is 
assumed  as  a  matter  of  law,  by  each  of  those  servants.  The 
risks  which  are  thus  considered  to  have  been  assumed  are  those 
which  are  commonly  described  as  "ordinary."  It  is  the  settled 
doctrine  of  the  law  that  the  servant  may  reasonably  be  presumed 
to  foresee  that  he  will  be  exposed  to  the  ordinary  risks  of  the 
business  in  which  he  engages,  but  that  he  ought  not  to  be  charged 
with  anticipating  the  consequences  of  risks  of  an  extraordinary 
character.  Ordinary  risks  and  hazards  of  the  employment  have 
been  defined  by  our  Supreme  Court  to  be  such  risks  as  are  usual 


[11] 

and  ordinary  therein  after  the  employer  has  taken  reasonable  care 
to  discover  and  prevent  such  risks. 

It  will  be  observed  that  the  defense  under  *'the  fellow  serv- 
ant rule*'  is  really  wdthin  the  scope  of  and  embraced  within  "the 
assumption  of  risk  rule,"  injury  from  the  negligence  of  a  fellow 
servant  being  one  of  the  ordinary  risks  of  an  employment  which 
the  servant  impliedly  assumes. 

CONTRIBUTORY  NEGLIGENCE 

Under  the  law,  as  it  is  in  Illinois  today,  the  obligation 
devolves  upon  the  servant  in  every  suit  for  damages  for  personal 
injuries  to  allege  in  his  declaration,  and  also  to  prove  by  the 
evidence,  that  the  master  was  guilty  of  a  specific  act  of  negligence, 
and  also  that  at  the  time  of  the  injury  he  himself  was  in  the 
exercise  of  due  or  ordinary  care  for  his  own  safety,  as  defined 
above. 

If  it  should  appear  from  the  evidence  that  at  the  time  of 
the  injury,  although  the  master  was  guilty  of  the  negligence  as 
charged,  the  servant  was  not  in  the  exercise  of  that  degree  of 
care  for  his  own  safety  which  an  ordinarily  prudent  person  under 
the  same  or  like  circumstances  would  exercise,  or  that  he  was  in 
fact  guilty  of  some  act  of  negligence,  which  want  of  care  or  act 
of  negligence  contributed  to  the  injury  in  the  least  degree,  the 
servant  cannot  recover  for  the  injury  received. 

The  above  has  been  the  rule  of  law  with  reference  to 
contributory  negligence  since  1885  when  the  Supreme  Court  of 
Illinois  departed  from  the  earlier  decisions  recognizing  the  doc- 
trine of  "comparative  negligence.'* 

COMPARATIVE  NEGLIGENCE 

What  is  meant  by  "comparative  negligence'*  may  be  gath- 
ered from  one  of  the  earliest  cases  in  Illinois  in  which  it  was 
defined  and  applied: — 

Mr.  Justice  Breese  in  the  case  of  Galena  &  C.  U.  R.  Co. 
v.  Jacobs.  20  111.  478  (1858)  stated  the  rule  as  follows: — 

The  question  of  liability  does  not  depend  abso- 
lutely on  the  absence  of  all  negligence  on  the  part 
of  the  plaintiff,  but  upon  the  relative  degree  of  care 
or  want  of  care,  as  manifested  by  both  parties,  for  all 


L12J 

care  or  negligence  is  at  best  but  relative,  the  absence 
of  the  highest  possible  degree  of  care  showing  the  pres- 
ence of  some  negligence,  sHght  as  it  may  be.  The  true 
doctrine,  therefore,  we  think  is,  that  in  proportion  to 
the  negligence  of  the  defendant,  should  be  measured 
the  degree  of  care  required  of  the  plaintiff — that  is  to 
say,  the  more  gross  the  negligence  manifested  by  the 
defendant,  the  less  degree  of  care  will  be  required  of 
the  plaintiff  to  enable  him  to  recover. 

The  doctrine  had  been  previously  recognized  and  applied 
in  Illinois  in  the  same  year  in  the  case  of  C.  &  R.  I.  Co.  v.  Still, 
19  111.  499. 

After  the  decision  in  these  cases  "the  comparative  negligence 
rule'*  continued  to  form  a  part  of  the  law  of  Illinois  until  the 
decision  in  the  case  of  Calumet  Iron  &  Steel  Co.  v.  Martin,  1  1 5 
111.  358  (1885),  when  the  Supreme  Court  after  a  careful  review 
of  the  previous  authorities  receded  from  the  position  formerly 
maintained  by  holding  that  the  authors  of  the  earlier  decisions 
had  no  intention  of  announcing  any  other  rule  than  that  the 
servant  must  exercise  ordinary  care.  To  quote  from  the  decision 
in  the  last  named  case,  the  court  says: — 

Within  the  contemplation  of  that  rule,  where  one 
has  observed  ordinary  care  with  reference  to  the  par- 
ticular circumstances  involved  for  his  personal  safety,  he 
has,  even  if  slightly  negligent,  observed  all  the  care 
the  law  requires  of  him;  and  where,  having  observed 
this  care,  he  is  injured  by  the  negligence  of  another, 
that  other  has  been  guilty  of  the  degree  of  neghgence 
for  which  the  law  charges  responsibility. 

It  has  been  said  that  the  application  of  **the  comparative 
negligence  rule"  to  the  particular  case  afforded  an  opportunity  to 
the  court  to  mitigate  in  part  the  harshness  of  the  rules  relating 
to  * 'contributory  negligence,"  and  made  it  generally  necessary 
to  submit  the  question  to  the  jury  to  determine  the  relative  degree 
of  negligence  of  the  master  and  his  servant.  The  rule  was 
therefore  a  favorable  one  for  the  servant  in  its  particular  opera- 
tion, although  there  is  very  little  difference,  as  an  abstract  propo- 
sition of  law,  between  the  slight  negligence  permitted  to  the 
servant  under  "the  comparative  negligence  rule,"  and  the  ordinary 
care  required  of  him  under  the  present  rule. 


L13J 

It  seems  to  us  that  it  should  make  very  little  difference  to 
the  servant  whether  in  his  controversy  with  the  master  the  rule 
were  applied  as  stated  in  the  earlier  decisions,  permitting  him 
to  recover  though  guilty  of  slight  negligence,  the  jury  indulging 
for  that  purpose  in  a  comparison  of  the  negligence  of  the  master 
with  his  negligence,  or  the  modern  rule  were  applied  that  the 
servant  could  not  recover  unless  at  the  time  of  the  injury  the 
servant  was  in  the  exercise  of  such  a  degree  of  care  for  his  own 
safety  as  an  ordinarily  prudent  man  would  exercise  under  the 
circumstances  then  existing,  because  the  qualification  of  the  modern 
rule  under  the  circumstances  then  existing  requires  the  jury  in 
passing  upon  the  question  as  one  of  fact  and  the  court  in  passing 
upon  it  as  one  of  the  law  to  keep  in  mind  all  the  circumstances 
then  existing,  including  the  negligent  act  of  the  master  and  to 
receive  the  matter  on  the  basis  of  the  degree  of  care  an  ordinarily 
prudent  man  would  have  exercised  under  those  circumstances. 

The  attempt  to  administer  the  law  under  the  earlier  rule 
had  been  unsatisfactory  because  of  the  obvious  impossibility  justly 
to  compare  negligence  against  negligence,  and  to  off-set  one  negli- 
gent act  against  another  negligent  act  and  to  apportion  damages 
accordingly.  The  modern  rule,  in  the  opinion  of  your  committee, 
has  had  the  desired  effect  of  simplifying  the  consideration  by 
courts  and  juries  of  the  question  of  want  of  due  care  or  contrib- 
utory negligence  in  affecting  the  right  to  recovery. 

Notwithstanding  the  attempt  of  the  court  to  assist  in  the 
administration  of  justice  in  adopting  a  more  lucid  and  rational 
rule,  the  question  of  want  of  due  care  or  of  contributory  negligence 
is  still  one  of  great  uncertainty  in  its  practical  application  to  a 
given  state  of  facts  for  the  reason  that  courts  and  juries  are  com- 
posed of  men,  and  minds  of  men  may  differ. 

The  substance  of  the  matter  is  that  while  we  have  now  a 
rule  of  law  which  is  as  succinct  and  concrete  a  statement  as  has 
yet  been  devised,  the  question  of  due  care  or  of  contributory 
negligence  in  any  given  case  is  not  thereby  settled  beyond  all 
controversy,  so  that  those  interested  can  conclusively  determine  the 
matter  for  themselves  because  the  question  must  be  submitted  in 
the  first  instance  to  a  jury  for  their  determination  as  a  question  of 


[14] 

fact,  and  then  to  the  judge  as  a  question  of  law.  The  authority 
of  a  judge,  however,  to  set  aside  the  verdict  of  the  jury  in  this 
connection  only  obtains  when  it  may  be  justly  said  that  the 
jury  has  been  controlled  by  wrong  impulses,  either  passion  or 
prejudice,  or  a  misunderstanding  of  the  facts,  and  that  the  minds 
of  all  reasonable  men,  when  considering  the  question  dispassion- 
ately, would  conclude  to  the  contrary. 

STATUTORY  LAW 

As  supplemental  to  or  in  modification  of  the  common  law 
with  reference  to  master  and  servant,  there  is  the  comprehensive 
law  relating  to  mines  and  mining  hereinabove  mentioned,  and  a 
child  labor  law,  the  statute  above  referred  to  causing  the  right  of 
action  for  the  death  of  an  injured  person  to  survive  to  the  per- 
sonal representative  for  the  benefit  of  the  widow  and  next  of  kin. 
The  rules  which  control  the  right  of  recovery,  however,  under 
this  statute  are  the  same  which  would  apply  to  the  claim  of  the 
injured  person  if  living,  and  the  amount  of  compensation  for  death 
is  limited  by  this  statute  to  $10,000.  Prior  to  the  year  1903 
the  amount  of  liability  in  Illinois  for  compensation  in  case  of 
death  was  limited  to  $5,000.  It  is  the  theory  of  this  last  named 
law,  however,  that  the  compensation  shall  be  commensurate  with 
the  actual  damage  to  the  widow  or  dependent  next  of  kin  occa- 
sioned by  the  death  of  the  decedent,  but  not  in  any  event,  however, 
to  exceed  the  limitation  fixed  by  the  statute.  In  addition  to  the 
statutes  above  mentioned,  there  is  in  force  in  Illinois,  a  statute 
requiring  automatic  couplers,  grab  irons  and  train  brakes  on  all 
railroads,  and  the  statute  requiring  blowers  on  metal  polishing 
machinery,  and  a  further  statute  requiring  guards  on  all  dangerous 
machinery  and  fences  around  dangerous  places  and  all  factories 
and  work  shops,  and  another  requiring  guards  and  safety  devices 
to  be  used  in  the  construction,  alteration  and  erection  of  high 
buildings,  etc.  Those  engaged  in  agricultural  pursuits  are  afforded 
some  protection  by  a  statute  requiring  guards  on  dangerous  por- 
tions of  threshing  machinery  and  corn  shellers.  In  none  of  these 
statutes,  however,  except  in  the  railway  safety  appliance  law,  has 
the  legislature  attempted  specifically  to  take  away   any  of  the 


[15J 

common  law  defenses  arising  under  **the  fellow  servant  rule," 
"the  assumption  of  risk  rule,"  or  that  of  "contributory  negligence.** 
The  courts,  however,  in  construing  these  various  acts  with  refer- 
ence to  their  effect  upon  the  right  of  the  injured  servant  recovering, 
have  held  that  as  against  the  specific  wilful  violation  of  the  provi- 
sions of  these  safety  appliance  acts  the  defense  of  **assumed  risk'* 
or  of  "contributory  negligence"  would  not  avail  the  master.  The 
control  of  the  relation  of  master  and  servant  rests  entirely  within 
the  power  of  the  state  legislature,  and  under  our  system  of  gov- 
ernment, as  a  general  proposition,  the  federal  government  has  no 
authority  to  legislate  with  reference  to  the  rights  of  the  citizens  of 
any  state.  The  federal  government,  however,  under  the  authority 
of  the  federal  constitution  authorizing  the  federal  government  to 
control  commerce  between  states,  has  passed  an  act  controlling 
the  rights  of  master  and  servant  engaged  in  interstate  commerce. 
The  first  attempt  at  this  legislation  was  in  1906  when  Congress 
passed  an  employers'  liability  act  affecting  common  carriers,  but 
the  Supreme  Court  pronounced  it  invalid  in  respect  to  carriers 
doing  both  interstate  and  local  business  within  the  state,  because 
it  did  not  clearly  limit  its  application  to  the  former.  On  April 
Tly  1908,  Congress  passed  a  new  act  in  which  it  attempted  to 
make  the  segregation  of  local  from  interstate  commerce  required 
by  the  decision  of  the  Supreme  Court,  by  substituting  for  "shall 
be  liable  to  damages  to  any  of  its  employes,"  "shall  be  liable  in 
damages  to  any  person  suffering  injury  while  he  is  employed  by 
such  carrier  in  such  commerce."  The  new  act  has  been  affirmed 
in  the  inferior  federal  courts  in  the  case  of  Watson  v.  St.  Louis 
etc.  R.  Co.,  169  Federal  Reports,  and  in  the  case  of  Zikes  v. 
O.  R.  &  N.  Co.,  1  79  Federal,  893.  Your  committee  has  not 
been  able  to  ascertain  whether  or  not  the  Supreme  Court  has 
considered  these  cases  on  appeal. 

THE  THEORY  OF  SYSTEMATIC  COMPENSATION 

It  has  come  to  be  considered  by  those  who  have  given  careful 
consideration  to  the  question,  that  it  is  not  enough  to  give  to  the 
servant  employed  by  the  master  compensation  only  for  those 
injuries  resulting  from  the  master's  negligence.     Under  the  rules 


[16] 

of  law  just  outlined,  a  very  large  proportion  of  the  accidents  which 
occur  in  the  industries  of  the  country  go  uncompensated.  In 
some  cases  on  the  other  hand  the  employer  is  held  for  substantial 
amounts  and  occasionally  verdicts  are  recovered  out  of  all  propor- 
tion to  the  extent  of  the  damage  really  sustained;  and  in  other 
instances  compensation  awarded  for  the  injury  is  not  adequate  or 
just.  In  this  relation  we  note  a  statement  of  the  causes  of  industrial 
accident  in  1897  in  Germany:  Fault  of  employer,  17.30%; 
of  workmen,  29.74%;  of  both,  4.83%;  of  fellow  servant, 
5.31%;  unavoidable  danger,  41.55%;  act  of  God,  1.27%. 
Applying  these  figures  to  the  rules  of  law  above  set  forth,  one  is 
impressed  with  the  small  proportion  of  industrial  accidents  in 
which  a  right  to  recover  can  be  sustained  by  the  servant.  The 
principle  which  has  been  adopted  in  most  civilized  countries  of 
the  world  within  the  last  twenty-five  years  is  a  radical  departure 
from  the  theory  of  compensation  which  theretofore  had  been  in 
force  and  briefly  it  is  as  follows : 

In  carrying  on  any  given  industry  for  the  benefit  of  those 
who  will  enjoy  the  products  of  the  services  supplied  thereby,  there 
will  be  on  the  whole,  taking  into  account  all  the  various  establish- 
ments engaged  in  those  industries,  a  more  or  less  stable  aggregate 
amount  of  loss  and  damage  occasioned  by  industrial  accidents. 
While  each  particular  accident  considered  by  itself  might  appear 
to  have  been  preventable,  if  an  extraordinary  degree  of  caution 
had  been  exercised,  it  will  also  well  appear  when  the  losses  are 
spread  over  the  entire  industry,  and  especially  when  the  experience 
of  many  years  is  combined,  that  there  is  a  more  or  less  steady 
ratio  between  the  financial  loss  and  the  financial  value  of  the  entire 
product,  indicating  that  accidents  are  governed  by  laws  of  proba- 
bility and  are  to  a  certain  degree  inevitable. 

In  other  words,  this  loss  or  damage  as  much  as  loss  and 
damage  by  destruction  of  material  or  wear  and  tear  of  the 
machinery,  is  a  part  of  the  cost  of  the  commodity  in  the  produc- 
tion of  which  the  workman  was  employed  at  the  time  the  accident 
took  place. 

It  follows  that  the  working  man,  or  his  family  in  event  of 
his  death,  should  be  compensated  in  a  reasonable  amount  for  the 


[17] 

consequences  of  an  industrial  accident,  not  in  order  that  some 
one  shall  be  mulcted  on  the  ground  that  he  was  at  fault,  but  in 
order  that  this  portion  of  the  cost  of  the  product  or  services  shall 
not  be  transferred  from  the  employer  and  the  ultimate  consumer 
to  the  workingman  and  his  family,  crushing  them  in  many  cases, 
and  eventually  shifting  the  burden  to  the  community  in  the  most 
undesirable  form  of  charity. 

Under  this  theory  if  justly  regulated,  there  would  be  and 
there  should  be  no  extraordinary  and  certainly  no  excessive  ver- 
dicts.     Compensation  should  be  governed  by  business  principles. 

Under  the  system  generally  in  vogue,  unfortunately  the 
servant  does  not  now  obtain  the  full  measure  of  benefit  to  which 
he  is  entitled,  even  in  cases  in  which  he  has  the  right  of  recovery, 
for  in  most  instances  the  compensation  is  paid  to  him  only  after 
long  and  expensive  litigation  and  an  exceedingly  large  amount 
of  the  money  paid  by  the  employer  by  reason  of  the  accident  does 
not  reach  the  place  where  it  is  most  needed,  that  is  the  purse  of 
the  injured  servants,  but  it  is  consumed  in  court  costs  and  attor- 
neys* fees  or  in  premiums  for  industrial  insurance. 

Theoretically,  the  servant,  although  now  bearing  the  risk 
of  injury  in  a  given  employment,  is  presumed  to  be  compensated 
therefor  by  an  increased  allowance  in  wages  which  is  supposed  to 
bear  some  relation  to  the  risk  of  injury  involved  in  the  occupation. 
It  has  also  been  the  idea  that  the  assumption  of  this  risk  in  lieu 
of  the  enhanced  compensation  was  a  proper  subject  of  contractual 
relation  between  the  servant  and  the  master,  but  this  reasoning  has 
now  become  obnoxious  to  those  who  have  made  a  careful  study 
of  the  subject,  because  the  practical  operation  of  the  system  is 
that  the  enhanced  compensation  is  only  paid  to  those  who  are  not 
injured.  Upon  misfortune  overtaking  the  servant  in  his  occupation 
in  which  he  meets  with  physical  injuries,  his  enhanced  compensa- 
tion and  all  compensation  ceases;  so  it  will  be  seen  in  that  appli- 
cation the  money  which  is  compensation  for  the  injury  does  not 
reach  the  proper  destination. 

It  has  also  come  to  be  recognized  that  the  assumption  of 
risk  for  an  enhanced  compensation  is  not  a  proper  subject  for 
contract  between  the  master   and  servant,   because  as  has  been 


[18] 

recognized  by  the  courts  in  connection  with  the  question  of  the 
right  of  the  servant  on  entering  the  employment  to  release  his 
master  from  liabilities  to  him  for  his  injury,  the  master  and  the 
servant  do  not  meet  upon  a  common  level.  The  master  has  the 
advantage  and  the  servant  the  disadvantage.  The  servant  com- 
pelled by  his  necessities  seeks  employment.  Perhaps  he  must 
take  that  which  is  offered  or  nothing.  The  master  in  offering 
the  employment  has  within  his  power  the  granting  of  that  which 
will  raise  the  servant  from  the  condition  of  want  to  one  of  at 
least  comparative  comfort.  The  allurement  of  this  temporary 
benefit  to  the  servant  is  sufficient  in  the  opinion  of  the  court  to 
bring  about  such  an  inequality  in  the  relation  of  the  master  and 
servant  as  to  render  such  a  contract  in  the  particular  instance 
above  mentioned  as  a  release  of  liability  as  against  public  policy. 

It  is  also  now  conceded  that  it  would  be  exceedingly  desir- 
able both  to  master  and  to  servant  were  some  basis  of  liability 
and  compensation  established  by  law  of  so  certain  and  absolute 
a  character  that  its  benefits  to  both  could  be  contemplated  at  the 
time  of  the  beginning  of  the  relations  of  master  and  servant,  so 
that  the  right  of  the  servant  to  compensation  in  case  of  injury 
would  be  known  in  advance,  and  the  liability  of  the  master  for 
compensation  to  his  servant  being  also  known,  could  be  dealt 
with  as  a  constant  factor  of  expense  in  the  master's  business. 

Another  important  matter  entering  into  the  theory  of  system- 
atic compensation  is  that  the  uncertainty  of  htigation  of  the  right 
of  compensation  should  be  removed  and  that  the  ascertainment  of 
the  right  and  the  application  of  the  remedy  by  the  payment  of 
compensation  should  be  made  as  nearly  automatic  as  is  practical, 
and  that  the  administration  of  the  law  be  so  simplified  as  to  reduce 
to  the  minimum  the  expense  both  to  the  servant  and  the  employer. 

WHAT  HAS  BEEN  DONE  WITH  REFERENCE 
TO  SYSTEMATIC  COMPENSATION 

As  has  been  said  earlier  in  this  report  systematic  compensa- 
tion for  industrial  accidents  has  been  the  subject  of  study  and  of 
legislative  action,  principally  in  European  countries  up  to  this 
time.     The  idea  will  at  once  suggest  itself  that  the  action  of  the 


[19] 

law-making  bodies  of  the  various  European  countries  which  have 
dealt  with,  this  subject  will  be  of  considerable  value  in  suggesting 
what  might  be  done  in  this  country  in  dealing  with  the  situation. 
Upon  consideration  of  the  matter,  however,  it  appears  that  be- 
cause of  the  difference  in  the  systems  of  government  of  the  Euro- 
pean countries  and  this  country,  there  are  a  great  many  sugges- 
tions and  ideas  incorporated  in  the  European  acts  which  are 
inapplicable  and  impractical  for  use  in  this  country  because  of 
the  constitutional  limitations  and  restrictions  obtaining  in  this 
country. 

It  will  be  recalled  that  we  have  what  is  known  as  a  dual 
form  of  government;  the  government  of  the  United  States  exer- 
cising a  limited  control  under  the  federal  constitution  of  all  the 
states  constituting  the  Union,  and  the  government  of  each  state 
exercising  control  of  its  citizens  and  territory  embraced  within  the 
confines  of  the  state.  It  will  also  be  recalled  that  the  power  of 
the  United  States  government  under  the  constitution  of  the  United 
States,  being  a  delegated  authority,  that  government  has  only  such 
power  and  authority  as  comes  directly  from  the  people  by  ex- 
pressed grant  as  defined  in  the  federal  constitution.  The  power 
and  authority  of  the  state,  however,  existing  also  in  its  people, 
the  state  constitution  is  not  a  delegation  of  authority  to  the  state 
government,  but  is  a  limitation  and  restriction  upon  the  legislative 
authority  of  the  state,  so  that  the  state  possesses  unlimited  authority 
except  where  that  authority  has  been  delegated  to  the  federal 
government  or  is  limited,  restricted  or  defined  by  the  state  con- 
stitution. 

Stated  in  another  way,  the  federal  government  has  only  such 
powers  of  control  and  legislation  which  are  specifically  delegated 
to  it  by  the  federal  constitution,  while  the  state  power  of  legisla- 
tion and  control  is  absolute  excepting  in  such  matters  as  have  been 
specifically  delegated  to  the  federal  government  in  its  constitution 
or  as  limited,  restricted  or  defined  by  the  state  constitution.  The 
federal  constitution  and  the  constitutions  of  the  various  states  are 
as  they  are  intended  to  be,  solemn  documents,  inflexible  and  sub- 
stantial in  their  nature,  not  to  be  changed  according  to  the  whim 
or  caprice  of  the  moment. 


[20] 

The  difficulty,  if  it  may  be  so  termed,  does  not  arise  in  the 
government  of  foreign  countries  where  the  legislative  power  does 
not  rest  with  the  people,  but  in  those  countries  such  changes  can 
readily  be  made  by  the  legislative  body  in  their  fundamental  or 
organic  laws  as  occasion  or  expedience  may  require.  It  has  even 
been  said  that  in  England,  Magna  Charta  might  be  altered  or 
amended  by  parliament  should  that  body  deem  it  necessary,  with- 
out recourse  to  the  people  for  authority  or  approval. 

Because  of  the  fact  that  the  question  of  systematic  compen- 
sation has  been  the  subject  of  investigation  and  thought  in  for- 
eign countries  for  a  comparatively  long  space  of  time,  the  result 
of  their  labors  can  be  of  advantage  in  a  general  way  in  suggesting 
that  which  would  be  desirable  for  like  legislation  in  this  country: 
and,  then,  it  will  be  necessary  to  consider  to  what  extent  the  experi- 
ences of  those  countries  can  be  adopted  and  made  available  under 
the  peculiar  constitutional  restrictions  in  this  country.  Until 
wathin  the  last  few  months  a  study  of  these  foreign  laws  has  been 
an  exceedingly  difficult  matter,  because  of  the  fact  that  no  Enghsh 
translations  of  them  existed;  but  in  September,  1910,  the  United 
States  bureau  of  labor  issued  a  bulletin  containing  a  summary  of 
foreign  workingmen's  compensation  acts,  which  was  the  first 
opportunity  presented  generally  in  this  country  for  obtaining  infor- 
mation as  to  what  had  been  done  in  those  states.  This  document 
is  quite  voluminous  and  to  enter  into  a  critical  minute  examination 
and  discussion  of  these  various  acts  will  involve  more  time  than  is 
at  the  disposal  of  your  committee  in  the  preparation  of  this  report. 

Mr.  Carmen  F.  Randolph,  of  the  New  York  bar,  has  v^it- 
ten  an  exhaustive  brief  on  **Legal  Aspects  of  Compensation  for 
Industrial  Accidents,'*  bearing  date  November,  1910,  and  in  this 
connection  has  taken  occasion  to  present  a  review  of  these  foreign 
laws,  and  we  take  the  liberty  of  quoting  at  length  from  his  brief 

EMPLOYMENTS  COVERED 

Great  Britain  excepted,  the  several  countries  do 
not    include    all    employments    in    their    compensation 
in  discussing  the  provisions  of  these  laws: 


[21] 

laws.  The  major  classification  is  the  selection  of  haz- 
ardous, as  distinguished  from  non-hazardous  employ- 
ments. 

In  some  laws  the  selection  is  made  in  brief  and 
more  or  less  general  terms.  Thus  the  French  law 
covers  workmen  **in  the  building  trades,  in  mills,  fac- 
tories and  workyards,  in  the  business  of  transportation 
by  land  and  water,  in  that  of  loading  and  unloading, 
in  public  storehouses,  mines,  surface  mines,  quarries, 
and,  furthermore,  in  every  enterprise  or  branch  thereof 
in  which  explosive  materials  are  manufactured  or  used, 
or  in  which  a  machine  operated  by  a  power  other  than 
that  of  man  or  animal  is  employed.*'  Other  laws  give 
elaborate  lists  of  the  industries  covered. 

The  laws  agree  in  covering  mining,  manufac- 
turing, transportation,  building,  etc.,  but  there  is  some 
diversity  in  respect  of  agriculture.  For  example, 
agricultural  employment  is  expressly  excepted  in  the 
Quebec  law.  It  is  expressly  included  in  respect  of 
accident  due  to  the  use  of  mechanical  power  in  Austria, 
Hungary  and  Italy,  and  impliedly  in  respect  of  power 
accidents  where  these  are  embraced  in  general  terms  as 
in  France  and  New  Zealand.  In  Germany  agricul- 
tural laborers  are  insured  under  a  separate  statute. 

Some  states  provide  separate  statutes  or  separate 
treatment  for  certain  employments,  e.g.,  mining,  navi- 
gation, railroading,  building.  For  example,  Germany 
has  special  laws  for  navigation  and  building,  and  the 
railroads  being  operated  by  the  government,  are  under 
an  official  regime.  The  British  act  contains  special 
provisions  for  seamen. 

Few,  if  any,  systems  save  the  British  cover  the 
domestic,  mercantile  and  commercial  employments,  ex- 
cept so  far  as  the  occasional  power  accidents  in  these  em- 
ployments fall  within  a  general  provision  of  the  law. 
Petty  industry — an  establishment  employing  only 
several  men — is,  or  may  be,  excepted  from  the  com- 
pulsory force  of  certain  compensation  laws;  for  exam- 
ple, Italy,  Germany.  The  exception  seems  to  be 
partly  based  on  the  theory  that  the  smaller  the  work- 
ing body  the  better  the  supervision  and  the  lesser  haz- 
ard ;  but  in  view  of  its  results  we  may  fairly  treat  it  as 
expressing  the  idea  that  the  small  employer  may  be 
too  nearly  in  the  financial  condition  of  his  workmen  to 
warrant  the  imposition  of  the  burden. 


[22] 

Generally  speaking  the  legislature  defines  once  for 
all  the  employments  affected.  But  we  find  here  and 
there  a  provision  authorizing  inclusion  or  exemption 
by  administrative  order.  For  instance,  in  Germany 
the  federal  council  may  exempt  "establishments  w^hich 
do  not  involve  special  danger  of  accident" ;  and  in  Aus- 
tria, the  minister  of  the  interior  may  exempt  or  include 
certain  establishments  owing  to  the  absence  or  presence 
of  dangerous  features. 

In  sharp  contrast  with  the  other  systems  is  the 
comprehensive  law  of  Great  Britain.  The  act  of  1 897 
covered  certain  hazardous  employments  only  and  ex- 
cepted the  "workshop,"  an  establishment  not  employ- 
ing more  than  five  men.  Agriculture  was  included 
by  the  amendment  of  1900.  The  act  of  1906  covers 
"any  employment"  without  regard  to  its  hazard  or  to 
the  size  of  a  particular  establishment;  excepting,  how- 
ever, employment  of  a  "casual  nature." 

INJURIES  COMPENSATED 

The  nature  of  the  injuries  calling  for  compensa- 
tion, their  occasion,  cause,  and  period  of  disablement, 
constitute  an  intricate  chapter  of  the  compensation  laws, 
whose  main  points  only  will  be  indicated. 

The  injury  must  be  accidental  and  the  broadly 
remedial  purpose  of  the  laws  is  generally  emphasized 
by  a  broad  definition  of  "accident."  The  German 
imperial  insurance  office  defines  an  accident  as  "a  hap- 
pening which,  doing  injury  to  the  integrity  of  the  human 
body,  is  produced  by  a  single  stroke  and  is  clearly 
marked  by  a  beginning  and  an  end."  A  French  pub- 
licist defines  it  as  "an  injury  to  the  human  body  due 
to  the  sudden  and  violent  action  of  an  exterior  cause." 
The  House  of  Lords  defines  it  as  "an  unlooked  for 
mishap  or  an  untoward  event  which  is  not  expected 
or  designed."  Among  the  "accidents"  embraced  in 
the  English  law  are  the  projection  of  an  anthrax  germ 
in  the  eye,  a  strain  rupturing  an  aneurism,  even  though 
too  slight  to  affect  a  healthy  man,  a  heat  stroke  in  a 
furnace  room,  a  sun  stroke,  the  murder  of  a  messenger 
carrying  his  employer's  money.  Among  those  em- 
braced in  the  French  law  are  an  injury  from  falling 
in  a  fit,  from  the  horse  play  of  a  comrade  unless 
the  victim  began  it,  from  voluntarily  taking  a  risk  in 


[23] 

the  line  of  humanity  or  duty.  We  note  here  that  the 
British  workmen's  compensation  acts  require  the  em- 
ployer to  compensate  the  victims  of  certain  "occupa- 
tional diseases,"  anthrax,  lead,  mercury,  phosphorus 
and  arsenical  poison,  for  example,  to  which  the  home 
secretary  has  added  others. 

"Occupational  disease*'  is  not,  on  the  Continent, 
embraced  in  accident  compensation  law.  The  laws 
broadly  agree  that  workmen  shall  receive  compensation 
for  such  accidents  only  as  occur  in  the  master's  service 
— for  example,  "in  the  course  of  their  employment,'* 
in  Austria  and  Germany;  "by  reason  of  or  in  course 
of  their  work,"  in  France  and  Quebec;  "in  the  course 
of  and  as  a  result  of  fulfilling  the  labor  contract  gov- 
erned by  the  act  of  March  10,  1900,"  in  Belgium; 
"arising  out  of  and  in  course  of  the  employment," 
in  Great  Britain. 

The  practical  construction  of  these  provisions 
varies  somewhat  in  the  several  countries,  but  as  a  whole 
they  express  the  principle  that  the  workman  shall  re- 
ceive compensation  only  for  injuries  occurring  during 
the  actual  or  constructive  performance  of  his  labor 
contract  and  connected  in  some  way  with  the  work. 
Furthermore,  the  accident  must  cause  disability — dis- 
figurement is  not  material  unless  it  actually  interferes 
with  employment. 

In  Great  Britain,  "serious  and  wilful  misconduct" 
of  the  victim  absolves  the  master  unless  the  injury 
result  in  "death  or  serious  and  permanent  disable- 
ment." The  Qjntinental  systems  generally  provide 
that  compensation  shall  not  be  paid  for  an  injury 
intentionally  caused  by  the  victim,  though  in  Hun- 
gary the  dependents  are  entitled  in  a  case  of  fatality. 
Inexcusable  fault  is  more  strictly  dealt  with  in  Ger- 
many and  Austria  than  in  France,  where  in  such  case 
a  judge  may  award  a  portion  of  the  regular  compen- 
sation. 

All  the  laws  deny  compensation  for  casualties  en- 
taihng  less  than  a  fixed  period  of  disablement,  but 
each  falls  into  one  or  two  grand  divisions  according  as 
accidents  are  or  are  not  partially  covered  by  a  system 
of   sickness   insurance. 

In  the  first  division  the  periods  are  comparatively 
long.      In  Austria  four  weeks'  and  in  Germany  three 


L24J 

months*  (ninety-one  days)  disability  elapses  before 
accident  compensation  becomes  due,  but  in  each  country 
a  disability  of  more  than  three  days  is  compensated 
through  a  compulsory  sickness  insurance  system  to 
which  the  workmen  contribute  two-thirds  of  the  ex- 
pense and  the  employer  one-third. 

In  the  second  division  they  are  comparatively 
brief;  for  example,  two  days  in  the  Netherlands,  three 
in  Russia,  five  in  France,  one  week  in  Belgium,  Great 
Britain,  New  Zealand,  South  Australia,  two  weeks  in 
British  Columbia  and  Queensland. 

WHO  RECEIVE  COMPENSATION 

The  industries  embraced  in  each  law  broadly  indi- 
cate the  parties  entitled  to  compensation,  except  where 
discriminations  are  made,  as  in  singling  out  workmen 
engaged  on  the  hazardous  side  of  an  employment,  e.g., 
the  use  of  machinery  in  agriculture.  In  each  country, 
however,  a  right  to  compensation  depends  more  or 
less  upon  a  maximum  rate  of  wages.  Great  Britain 
alone  distinguishes  here  between  the  manual  and  the 
clerical  employe,  imposing  no  wage  limit  upon  the 
former  while  denying  compensation  to  the  latter  whose 
annual  wages  exceed  $1,216.  In  the  other  countries 
the  wage  limit  affects  all  employes  and  works  in  one  of 
two  ways.  In  one  group  of  laws  a  victim  receiving 
more  than  a  certain  annual  wage  is  not  compensated: 
Belgium,  $463;  Denmark,  $645;  Germany,  $714; 
Russia,  $772;  Italy,  $1.35  per  diem.  In  the  second 
group,  employes  in  receipt  of  more  than  a  fixed  sum 
receive  a  compensation  based  upon  these  figures,  not  tak- 
ing the  excess  into  account;  Austria,  $487;  France, 
$463;  Hungary,  $487;  Norway,  $321;  Nether- 
lands, $1.61  per  diem. 

WHO  PAY  COMPENSATION 

No  state  appears  to  contribute  to  accident  com- 
pensation (except  of  course  where  an  industry  is  oper- 
ated by  the  state,  e.g.,  the  German  railways),  the 
prevalent  purpose  being,  as  we  shall  see,  to  impose  this 
upon  the  industries  affected  and  not  directly  upon  the 
resources  of  the  community  at  large.  We  shall  see, 
however,  that  certain  states  take  a  deep  interest  in  the 


[25] 

integrity  and  distribution  of  compensation  funds,  act- 
ing as  administrators,  insurance  agents,  etc. ;  and  in 
Germany  the  government  actually  advances  compen- 
sation through  the  post  offices,  these  (post  offices) 
honoring  orders  given  by  the  employers'  associations 
which  are  thereafter  assessed  for  the  sums  advanced. 

In  Austria  workm.en  receiving  cash  wages  are  re- 
quired to  contribute  1 0  per  cent  thereof  to  the  accident 
fund,  the  employer  making  deduction  and  depositing  the 
amounts.  Austria  alone  requires,  in  terms,  a  contribu- 
tion to  accident  compensation,  and  this  a  small  per- 
centage, but  it  prescribes  that  accidents  entailing  not 
more  than  four  weeks'  disability  shall  be  compensated 
from  the  sickness  insurance  fund,  to  which  workmen 
contribute  two-thirds  to  the  employer's  one. 

In  Germany  a  rule  of  like  tenor,  save  that  the 
four  weeks  is  increased  to  thirteen,  makes  the  work- 
men the  chief  contributors  in  the  majority  of  casual- 
ties; for  example,  in  1907,  out  of  662,901  accidents 
only  144,703  fell  within  the  compensation  law,  but 
their  contribution  to  the  aggregate  cost  of  accident  is 
relatively  slight,  the  estimates  for  1 886-95  allotting 
92  per  cent  to  the  employers.  All  the  laws  impose  upon 
the  employer  the  immediate,  and,  excepting  the  work- 
m.en's  contribution  in  Austria,  the  entire  liability  for 
whatever  is  defined  as  accident  compensation. 

Reserving  for  the  present  the  question  whether  this 
statutory  liability  may  be  passed  on  or  distributed  by 
some  method  of  insurance,  we  inquire  first  whether  it 
excludes  liability  in  every  other  form,  and  then  whether 
the  employer  may  substitute  a  voluntary  comj>ensation 
scheme  for  the  statutory  one. 

AS  TO  EXCLUSION  OF  LAW  SUITS 

The  fact  that  an  employer  is  liable  for  statu- 
tory compensation  does  not,  of  course,  relieve  him  from 
prosecution  in  case  the  cause  of  injury  falls  within  the 
criminal  law.  Furthermore,  as  statutory  compensa- 
tion, being  graded  to  cover  all  accidents  regardless  of 
their  causes,  presumably  falls  below  the  damages  prob- 
ably recoverable  by  the  victim  of  an  employer's  negli- 
gence and  well  below  the  punitive  damages  recover- 
able in  case  of  his  gross  misconduct,  it  is  material  to 


[26] 

inquire  whether  or  when  the  victim  may  sue  instead 
of  claiming  compensation. 

As  the  laws  generally  agree  in  denying  compensa- 
tion to  the  victim  of  his  own  misconduct,  so  generally 
they  leave  open  a  suit  for  damages  to  the  victim  of  an 
employers'  gross  misconduct,  though  in  Germany  suit  is 
maintainable  only  when  the  employer  or  his  agent  has 
been  subjected  to  penal  sentence.  Also  gross  mis- 
conduct commonly  requires  the  employer  to  indemnify 
third  parties  for  whatsoever  liability  they  have  assumed 
for  him  or  share  with  him.  For  example,  if  he  be  a 
member  of  an  association  he  must  make  good  to  it  com- 
pensation paid  on  this  account  as  in  Hungary  and  Ger- 
many. 

Beyond  agreeing  that  damage  suits  may  be  main- 
tained in  cases  of  gross  or  criminal  misconduct,  the 
laws  divide  into  two  groups  in  their  regard. 

In  one  group,  including  Belgium,  France,  Hun- 
gary, Germany,  the  injured  workman  is  barred  from 
action. 

Great  Britain  heads  the  other  group.  The  work- 
men's compensation  act  leaves  intact  not  only  the  com- 
mon law  action,  but  actions  under  the  employers'  liabil- 
ity act  of  1 880,  but  it  seems  that  a  workman  who  loses 
his  suit  cannot  thereafter  institute  arbitration  proceed- 
ings under  the  act.  He  has  made  his  election  and  must 
abide  by  it.  The  act  provides,  however,  that  where 
it  is  determined  in  an  action  that  the  defendant  is 
not  liable  in  damages,  but  would  have  been  liable  for 
the  statutory  compensation  the  court  shall,  if  the  plain- 
tiff request,  assess  compensation,  deducting,  however, 
all  or  part  of  the  costs  of  suit. 

In  Sweden  a  workman  may  both  claim  indemnity 
under  the  "common  law  or  special  law"  and  compensa- 
tion under  the  statute,  but  if  he  obtain  damages  the 
employer  may  deduct  the  compensation. 

SUBSTITUTION  OF  VOLUNTARY  SCHEME 

On  the  theory  that  a  workman  in  "contracting 
out"  of  a  benefit  allowed  by  statute  is  not  really  a  free 
agent,  the  laws  generally  forbid  unofficial  agreements 
between    employer   and   workmen   whereby    the    latter 


[27] 

waive  the  benefit  of  their  provisions.  Some  laws  pro- 
vide, however,  that  a  voluntary  compensation  scheme 
approved  by  the  authorities  as  being  of  at  least  equal 
value  to  the  beneficiaries  may  be  substituted  in  whole 
or  in  part  for  the  compulsory  one. 

Workmen's  acceptance  of  the  scheme  is  required 
in  Great  Britain;  but  not  in  Austria,  France,  Italy. 

THE  COMPENSAl  ION 

The  laws  generally  require  the  employer  to  pay 
funeral  expenses  not  exceeding  a  fixed  amount,  and  first 
aid  to  the  injured  is  usually  prescribed  in  one  way  or 
another.  All  the  laws  base  compensation  on  the 
victim's  earnings,  and  in  computing  these  any  valuable 
consideration  over  and  above  cash  payments  is  gen- 
erally reckoned,  as  for  example,  a  workman's  board. 
In  an  English  case  a  waiter's  tips  were  taken  into 
account.  In  some  countries  earnings  are  calculated  on 
a  collective  basis  for  certain  classes  of  workmen;  for 
example,  seamen  and  agricultural  laborers  in  Ger- 
many. 

In  cases  of  fatality,  compensation  is  paid  to  de- 
pendents either  in  the  form  of  a  pension  or  in  a  lump 
sum.  A  pension  of  50  per  cent  of  annual  earnings  is 
paid  in  Norway,  60  per  cent  in  Austria,  France,  Ger- 
many, Hungary,  the  Netherlands;  66  per  cent  in  Rus- 
sia. Belgium  prescribes  an  annuity  of  30  per  cent  of 
annual  earnings.  In  the  following  states  these  lump 
sums  are  paid  instead  of  pensions:  Three  years'  earn- 
ings, but  not  under  $729  nor  over  $1,459  in  Great 
Britain  and  South  Australia ;  not  under  $  1 ,000  or 
over  $1,500  in  British  Columbia;  not  under  $973  or 
over  $1,946  in  New  Zealand  and  Queensland;  four 
years'  earnings,  but  not  under  $321  nor  over  $857, 
in  Denmark ;  five  times  the  annual  earnings  in  Italy. 

Some  laws  apportion  the  death  compensation 
among  dependents  according  to  a  rigid  schedule  so  that 
the  sum  actually  paid  depends  on  the  existence  of 
persons  answering  the  description;  for  example,  in 
Sweden,  $32  to  a  widow  during  widowhood  and  $16 
to  each  child  until  it  reaches  fifteen  years,  the  whole 
not  to  exceed  $80  per  year.  Other  laws  require 
the  distribution  of  a  specific  amount  among  whatever 
dependents  may  be  entitled;  for  example,  Italy. 


L28J 

For  total  disability  the  following  states  prescribe 
these  amounts  by  way  of  pension:  Austria,  Denmark, 
Germany,  Hungary  and  Norway,  66-2/3  per  cent  of 
the  annual  earnings;  Belgium,  50  per  cent  daily  wages; 
Great  Britain  a  weekly  payment  of  not  more  than  50 
per  cent  of  average  weekly  earnings  and  not  over  $4.87 
per  week;  a  weekly  payment  of  not  more  than  50  per 
cent  of  average  weekly  earnings,  not  exceeding  $1,500 
altogether,  in  British  Columbia;  not  exceeding  $1,459 
in  New  Zealand,  South  Australia  and  Western  Austra- 
lia; not  exceeding  $1,936  in  Queensland;  in  Italy  six 
times  annual  earnings  but  not  less  than  $579;  in  Swe- 
den an  annual  pension  of  not  more  than  $80.  In 
Germany  and  Hungary  the  pension  is  increased  to  full 
annual  earnings  when  the  victim  is  so  helpless  as  to 
require  an  attendant. 

In  case  of  partial  disability  certain  states  expressly 
prescribe  compensation  according  to  an  estimated  dimi- 
nution of  the  victim's  earning  power;  that  is  to  say,  he 
receives  the  assumed  difference  between  earnings  before 
and  after  the  accident,  and  it  would  seem  that  the 
laws  generally  operate  along  this  line. 

Most  laws  do  not  grade  disability  compensation 
according  to  a  classified  list  of  specific  injuries.  But 
Sweden  specifies  certain  evidences  of  total  disability 
and  schedules  compensation  for  partial  disability  70 
per  cent  of  the  compensation  limit  in  the  case  of  loss 
of  one  eye  and  impairment  of  the  other,  down  to  10 
per  cent  for  deafness  of  one  ear.  And  the  second 
schedule  of  the  New  Zealand  law  prescribes  compen- 
sation ranging  from  100  per  cent  of  the  limit  in  such 
cases  mental  incapacity,  loss  of  eyes,  both  hands  or 
feet,  etc.,  down  to  4  per  cent  for  loss  of  finger  joint. 

Whether  disabiHty,  total  or  partial,  is  permanent 
or  temporary  gives  rise  to  various  provisions  which  need 
not  be  analyzed,  but  it  is  important  to  note  that  in  a 
case  of  continuing  disability  the  laws  generally  pro- 
vide for  revision  of  the  compensation  down  or  up  as 
the  condition  of  the  beneficiary  changes  for  better 
or  worse. 

An  employer  or  his  insurer  who  shall  become  re- 
sponsible for  an  accident  pension  may  desire  to  com- 
mute it  for  a  lump  sum  which  the  beneficiary  may  be 
even  more  desirous  of  handling.  Whether  this  may  be 
done  depends  generally  upon  how  keenly  the  state  is  con- 


[29] 

cerned  to  assure  a  continuing  aid  to  the  beneficiaries  for 
the  handing  over  of  a  lump  sum  may  well  mean  a 
speedy  dissipation  of  the  money  and  an  early  recourse 
to  that  charitable  aid  which  systematic  compensation 
aims  to  avoid.  The  policy  of  the  European  states  gen- 
erally is  against  commutation.  For  example,  in  Aus- 
tria, commutation  is  allowed  only  when  "the  commune 
legally  bound  to  care  for  the  claimant  under  the  poor 
laws  has  consented  to  the  agreement.'*  In  France,  the 
capital  sum  cannot,  usually,  be  demanded,  but  the  em- 
ployer may  discharge  his  obligation  by  paying  the 
sum  into  the  national  retirement  fund  (which  then 
assumes  the  pension)  and  he  must  do  this  in  case  he 
ceases  to  do  business.  In  Germany  a  partial  disabil- 
ity pension  of  not  more  than  1 5  per  cent  of  the  full 
amount  may  be  commuted  for  a  capital  sum  if  a  request 
by  the  beneficiary  shall  be  approved  by  the  authorities. 

CLAIMS  FOR  COMPENSATION  AND 
SETTLEMENT  OF  DISPUTES 

The  laws  generally  prescribe  that  the  circum- 
stance and  nature  of  each  casualty  be  speedily  recorded, 
and  that  a  claim  for  compensation  shall  be  presented 
within  a  fixed  time.  Establishment  of  the  fact  and 
degree  of  accidental  injury  and  an  accurate  estimate 
of  its  effect  are  the  essential  foundations  of  every  just 
claim,  and  the  laws  endeavor  to  guard  against  mistake, 
simulation  and  malingering  by  prescribing  an  impartial 
medical  service.  It  would  seem  that  everywhere  a  claim- 
ant may  be  required  to  submit  to  an  impartial  medical 
examination;  and,  furthermore,  that,  as  in  Great  Brit- 
ain, when  a  simple  surgical  operation  will  relieve  or 
lessen  disabiHty  the  claimant  must  submit  to  it  or  reduce 
his  claim,  though  he  is  not  called  upon  to  undergo  a 
serious  one.  In  stating  that  the  laws  generally  pre- 
scribe the  opinion  of  an  impartial  expert  in  case  the 
doctors  of  the  respective  parties  disagree  we  simply 
indicate  the  general  method  of  deaHng  with  a  branch 
of  the  compensation  system  of  vital  importance,  and 
one  peculiarly  open  to  errors  and  deceptions  whose  recti- 
fication depends  largely  upon  the  professional  skill  and 
standing  of  the  doctors  employed. 

Passing  from  the  special  subject  of  medical  dis- 
putes  to    the   general   procedure    for   the   presentation 


[30] 

of  claims  and  the  adjudication  of  the  serious  contro- 
versies that  will  arise,  we  find  widely  different  methods 
among  the  several  systems. 

In  Germany  where  the  compensation  system  is 
wholly  within  the  sphere  of  public  law,  the  judicial 
tribunals  are,  it  would  seem,  practically  excluded  from 
all  participation  in  its  working  and  even  from  inter- 
preting it.  The  employers*  associations  determine 
claims  in  the  first  instance,  and  their  decisions  may  be 
appealed  to  specially  constituted  arbitral  tribunals.  In- 
terpretation is  the  function  of  the  imperial  insurance 
office.  TTie  general  spirit  of  the  German  method  is 
followed  in  Austria  and  Hungary,  though  with  im- 
portant differences  in  form. 

In  Great  Britain  the  question  whether  a  par- 
ticular case  is  covered  by  the  compensation  act  is  deter- 
mined by  the  regular  courts  in  a  regular  suit,  and  there 
is.  much  litigation  over  the  interpretation  of  important 
phrases.  When,  however,  the  case  is  admittedly  within 
the  act,  the  compensation  is  in  the  vast  majority  of 
instances  agreed  upon  according  to  a  simple  formula; 
and,  in  case  of  dispute,  the  county  courts  are  author- 
ized to  arbitrate  or  appoint  arbitrators.  Some  such 
system  generally  obtains  in  the  British  Colonies.  In 
Quebec,  however,  a  claimant  must  institute  an  action 
at  law  without  a  jury  and  the  judgment  of  the  court 
may  be  appealed.  In  New  Zealand  a  court  of  arbitra- 
tion, whose  general  powers  are  defined  by  the  industrial 
conciliation  and  arbitration  act  of  1 908,  has  jurisdic- 
tion over  all  claims  for  compensation. 

France  largely  utilizes  the  civil  courts  in  the  ad- 
justment of  compensation  claims,  though  the  procedure 
is  of  a  somewhat  summary  nature.  The  accident  itself 
is  the  subject  of  a  judicial  inquiry  conducted  by  a 
justice  of  the  peace  and,  if  a  claim  for  compensation 
is  not  agreed  upon  before  the  president  of  a  district 
court,  suit  follows  in  a  court  chosen  by  the  more  dili- 
gent party.  The  court  shall  summarily  decide  the  mat- 
ter, and  the  decision  may  be  appealed  according  to  the 
<:ommon  law. 

INSURANCE 

Compulsory  compensation  is  the  root  of  every  sys- 
tem and  generally,  as  we  have  seen,  the  compulsion, 
is  addressed  to  employers.  This  element  of  compulsion 


[31] 

needs  to  be  emphasized  as  being  fundamental  because 
some  writers  seem  to  emphasize  compulsion  only  where 
insurance  of  compensation  is  made  obligatory.  But 
in  truth,  insurance,  even  though  a  statute  link  it  with 
compensation,  is  essentially  a  sequent  and  not  an 
intrinsic  factor  thereof.  It  is  a  method  for  at  once 
effectuating  and  distributing  a  primary  obHgation 
already  imposed.  In  treating  insurance,  whether  com- 
pulsory or  not,  as  ancillary  to  compulsory  compensa- 
tion, we  do  not  minimize  its  real  importance;  we  sim- 
ply put  it  in  its  proper  place. 

Insurance  of  compensation  benefits  the  injured 
workman  by  presumably  securing  to  him  the  payment 
of  whatever  sums  may  become  due,  and  where  it  is 
made  obligatory  we  may  assume  that  the  workman's  in- 
terest is  the  prominent  motive.  But  to  the  party  respon- 
sible for  compensation,  insurance  whether  obligatory 
or  not,  is  of  equal  or  even  greater  concern.  Indeed  it 
is  usually  a  commercial  necessity,  for  only  by  some 
method  of  insurance  may  the  burden  of  his  risk  be  light- 
ened through  distribution.  This  need  is  completely  met 
in  the  states  where  the  law  at  once  requires  insur- 
ance and  ordains  the  method.  It  is  partly  met  where 
the  law  encourages  insurance  by  indicating  institutions 
to  which  the  employer  may  transfer  his  obligations. 
Where  the  law  is  silent  he  who  would  insure  must  do  it 
in  his  own  way  and  at  his  own  risk.  Always  bearing 
in  mind  that  insurance  in  its  passive  sense  tends  to 
secure  the  workman,  we  have  also  to  consider  it  in 
its  active  sense,  as  something  to  be  done  by  the  respon- 
sible party  for  his  immediate  protection.  With  this  pref- 
atory word  on  the  double  function  of  insurance,  we 
take  up  an  important  and  difficult  chapter  of  our  sub- 
ject. 

**State'*  insurance  means,  I  take  it,  insurance  at  the 
public  expense,  a  charge  on  the  tax-paying  body;  and 
there  are  those  who  would  thus  socialize  all  insurance 
under  government  auspices.  At  present  state  insurance  is 
exemplified  fully  in  such  legislation  as  the  British  old 
age  pension  scheme;  and,  to  a  degree  where,  as  in 
Germany,  the  taxpayers  contribute  to  invalidity  and 
pension  annuities;  but  as  yet  it  has  hardly  if  at  all 
entered  into  the  field  of  industrial  accident.  While 
state  insurance  in  its  primary  sense  plays  at  present  a 
relatively  small  part  in  workmen's  compensation,  we 


L32J 

shall  presently  mark  its  appearance  in  a  secondary 
sense  wherever  the  government  acts  as  the  depository 
and  administrator  of  accident  funds  created  by  pri- 
vate contributions. 

An  employer  who,  under  a  compensation  law,  is 
liable  at  any  moment  for  an  unforeseen  sum  of  money, 
should  be  able  to  anticipate  and  assuage  the  contin- 
gency by  some  method  of  insurance.  Indeed  if  the 
theory  of  compensation  laws  that  industry  should  bear 
the  cost  of  its  casualties  is  to  be  fairly  effectuated,  it 
must  be  possible  approximately  to  calculate  the  cost, 
and  this  cannot  be  done  if  each  casualty  must  be 
financed  separately.  We  have,  therefore,  to  inquire 
whether  a  given  law  imposes  upon  employers  a  col- 
lective liability  which  involves  distribution  of  risk,  or 
an  individual  liability;  and  how  in  either  case  it  deals 
with  the  matter  of  insurance ;  and  whether  or  how  far  it 
permits  an  employer  to  shift  his  liability.  In  pursu- 
ing this  inquiry  the  laws  may  be  conveniently  classified 
according  as  they  ignore  insurance,  as  they  encourage  it 
or  as  they  compel  it. 

The  British  compensation  act  imposes  individual 
liability  upon  every  employer  within  its  purview,  from 
the  railway  company  to  the  small  householder.  Ex- 
cept as  the  act  authorizes  the  secretary  of  state  to  order 
an  employer  to  insure  his  workmen  against  industrial 
disease  in  an  established  mutual  trade  insurance  com- 
pany or  society  which  already  comprises  a  majority 
of  the  employers  in  the  particular  industry — an  excep- 
tion, be  it  noted,  not  affecting  "accident"  in  the  ordi- 
nary sense — the  British  system  takes  no  account  of 
insurance.  The  employer  is  left  to  insure  his  risk  or  not 
at  discretion.  He  cannot  get  rid  of  his  personal  lia- 
bility except  that  in  case  of  a  continuing  compensation 
he  may  purchase  an  annuity  from  the  post  office 
savings  bank — an  opportunity  which  seems  to  be  rarely 
utilized.  The  state  takes  no  concern  in  securing  the 
workman  beyond  making  a  compensation  claim  a  first 
lien  in  case  of  the  employer's  insolvency. 

The  British  Colonies  generally  follow  the  mother 
country  in  leaving  insurance  to  the  employers*  discre- 
tion, though  the  recent  law  of  Quebec  so  far  recog- 
nizes the  functions  of  insurance  companies  as  to  require 
those  who  assume  payment  of  the  "rents*' — pensions — 
to  deposit  an  adequate  fund  with  the  government  of  the 


[33] 

Dominion  or  the  province  and  to  conform  to  such  con- 
ditions as  the  lieutenant  governor  may  impose.  In  the 
event  of  a  company's  default,  however,  the  employer 
is  not  relieved.  In  fine,  the  British  Empire  prescribes 
"workmen's  compensation"  as  distinguished  from 
"workmen's  insurance,"  yet  it  involves  insurance  in  a 
broad  sense,  for,  as  Lord  Morris  said;  "The  liability  of 
the  employer  *  *  *  becomes  that  of  an  insurer 
against  accident  to  the  workmen." 

CONTINENTAL  INSURANCE  SYSTEMS 

The  workmen's  compensation  systems  of  continen- 
tal Europe  difFer  radically  from  the  British  in  evincing 
more  or  less  concern  in  insurance,  and  in  this  relation 
they  are  broadly  classified  according  as  the  insurance  is 
voluntary  or  compulsory.  Insurance  is  wholly  or 
mainly  voluntary  in  Belgium,  Denmark,  Sweden  and 
France,  and  in  each  country  the  employers  are  individ- 
ually responsible  for  compensation. 

In  Belgium  the  employer  may  shift  his  respon- 
sibility to  an  insurance  company  or  a  mutual  asso- 
ciation approved  by  the  state.  In  case  he  becomes 
liable  for  a  pension  he  shall  secure  its  capitalized  value 
by  some  approved  system  or  deposit  or  insurance. 

In  Denmark  individual  responsibility  of  an  em- 
ployer may  be  transferred  to  an  approved  insurance 
company. 

In  Sweden  the  employer  may  shift  his  liability 
by  insuring  in  a  state  insurance  institute,  from  which  he 
may  also  purchase  whatever  pensions  may  be  charged 
upon  him. 

In  France  the  employer  is  individually  responsible. 
He  may  be  released  from  the  whole  or  a  part  of  the 
cost  of  illness  and  the  temporary  compensation  by  sat- 
isfying the  authorities  that  he  has  insured  his  work- 
men in  an  approved  mutual  association. 

For  securing  compensation  for  death  or  perma- 
nent incapacity  the  French  law  provides : 

"Art.  24. — Whenever  employers  who  are  liable, 
or  the  insurance  companies,  with  fixed  premiums  or 
mutual,  or  the  guaranty   associations  whose  members 


L34J 

are  liable  jointly  or  severally,  fail  to  pay,  when  due, 
the  compensation  charged  against  them  as  a  result  of 
accidents  causing  death  or  permanent  incapacity  for 
work,  the  payment  shall  be  secured  to  the  interested 
parties  through  the  national  old  age  pension  fund,  by 
means  of  a  special  guaranty  fund,  established  as  here- 
inafter provided,  the  management  of  which  shall  be 
entrusted  to  the  said  fund. 

"Art.  25. — To  establish  the  special  guaranty 
fund  there  shall  be  added  to  the  charge  for  licenses 
of  the  industries  specified  in  Article  1 ,  four  centimes 
(0.8  cents)  extra.  A  tax  of  five  centimes  (1  cent)  a 
hectare  per  mining  concession  shall  be  collected  on 
mines.  These  taxes  may  be  increased  or  reduced  ac- 
cording to  the  necessities  of  the  case  by  the  financial 
law. 

"The  national  retirement  fund  may  have  recourse 
against  the  debtor  employers  for  the  amounts  paid  by 
it  on  their  account  under  the  preceding  provisions. 

"For  reimbursing  itself  for  its  advances,  the  fund, 
in  case  of  insurance  of  the  employer,  shall  enjoy  the 
preference  under  the  provisions  of  Article  2102  of  the 
civil  code  relative  to  the  compensation  due  by  the  in- 
surer, and  it  shall  have  no  recourse  against  the  em- 
ployer.** 

Compulsory  insurance  is  the  rule  in  the  remain- 
ing systems  we  shall  survey.  Workmen  "are  insured** 
in  Germany;  "must  be  insured'*  in  Italy;  "shall  be 
insured"  in  Austria,  the  Netherlands  and  Norway; 
are  "subject  to  compulsory  insurance'*  in  Hungary. 
In  such  states  alone  do  we  find  workmen*s  "insurance** 
thoroughly  exemplified. 

In  the  Netherlands,  Italy  and  Norway  the  em- 
ployers are  individually  responsible.  The  Nether- 
lands has  estabhshed  a  royal  insurance  bank,  with  the 
post  office  as  branches  thereof.  Each  employer  may 
pay  to  the  bank  annually  a  premium  based  upon  his 
wage  account,  the  bank  paying  from  the  aggregate 
fund  whatever  compensation  may  be  due.  An  em- 
ployer may,  however,  be  permitted  to  assume  per- 
sonally his  obligation  or  to  transfer  it  to  a  company  or 
a  mutual  association  provided  he  or  the  transferee  shall 
deposit  in  the  bank  a  sufficient  pledge.  It  appears  that 
the  bank  gets  the  poorer  risks  and  is  obliged  to  make  up 


L35J 

deficiencies.  Norway  requires  all  employers  to  insure 
in  a  state  insurance  institution.  In  Italy  the  employer 
must  insure  either  in  the  national  fund  for  insurance  of 
workmen  against  industrial  accidents  or  in  private  com- 
panies approved  by  the  state,  unless  he  shall  establish 
for  at  least  500  workmen  an  adequate  compensation 
scheme,  or  be  joined  in  a  mutual  insurance  association, 
both  being  approved  by  the  state.  In  Germany,  Aus- 
tria and  Hungary  compulsory  compensation  and  com- 
pulsory insurance  are  actually  interwoven,  for  each 
system  imposes  upon  employers  a  collective  responsi- 
bility and  this  involves  the  basic  principle  of  insur- 
ance— distribution  of  risk.  The  employers'  accident 
association  is  the  backbone  of  each  system. 

THE  GERMAN  ASSOCIATIONS 

As  Germany  led  off  in  adopting  the  principle  of 
workmen's  compensation,  so  in  the  employers'  accident 
associations  she  has  made  the  most  striking  contribu- 
tion to  its  machinery.  Promising  that  these  associations 
are  subject  to  regulative  and  corrective  powers  imme- 
diately or  finally  vested  in  the  imperial  insurance  office, 
we  shall  give  a  general  idea  of  their  organization, 
functions  and  responsibilities  utilizing  largely  the  literal 
texts,  though  not  keeping  to  the  statutory  order. 

Insurance  is  undertaken  on  the  mutual  plan  by 
the  heads  of  establishments  subject  to  the  law,  who  are 
for  this  purpose  united  into  accident  associations.  These 
are  formed  for  specified  districts  and  comprise  all  the 
establishments  of  those  branches  of  industry  for  which 
they  are  formed,  though  the  latter  provision  may  be 
waived  in  the  case  of  railways.  An  association  may 
provide  for  its  division  into  geographical  sections. 
Establishments  comprising  substantial  parts  of  different 
branches  of  industry  shall  belong  to  that  association 
to  which  the  main  establishment  belongs.  The  asso- 
ciation shall  compensate  for  accidents  in  other  estab- 
lishments if  these  occur  in  operations  for  which  the 
order  is  given  and  the  wages  paid  by  a  member.  No 
contributions  may  be  required  or  expenditures  made 
except  for  payment  of  compensation,  administration, 
reserve  funds,  prizes  for  rescue  and  prevention  of  acci- 
dents and,  with  the  consent  of  the  imperial  insurance 
office,  the  establishment  of  hospitals,  sanatoriums,  etc. 


[36] 

The  association  may  acquire  rights,  assume  obHgations 
and  sue  and  be  sued  in  its  own  name,  and  for  its 
obHgations  the  property  of  the  association  is  the  only 
security  for  creditors. 

The  internal  law  of  the  association  is  contained  in 
a  constitution  enacted  by  the  members  at  a  general 
meeting  and  approved  by  the  imperial  insurance  office. 

The  affairs  of  the  association,  except  as  they  are 
within  the  competency  of  the  general  meeting,  are  ad- 
ministered by  a  board  of  directors  and  by  agents  who 
shall  be  members  and  shall  serve  without  compensation 
save  for  expenses.  It  is  represented  by  its  board  of 
directors  and  is  bound  by  all  lawful  acts  of  the  board. 

Every  owner  of  an  establishment  belonging  to 
those  branches  of  industry  for  which  the  association 
is  established  is  a  member  of  the  association  if  the 
establishment  is  located  in  the  district  of  the  associa- 
tion. The  ownership  begins  when  the  establishment 
opens  or  when  it  becomes  subject  to  insurance.  The 
owner  shall  present  to  the  lower  administrative  author- 
ities a  declaration  stating  inter  alia  the  nature  of  his 
establishment,  the  number  of  insured  persons  therein 
and  the  accident  association  to  which  it  belongs;  and 
in  case  of  mistake  in  the  latter  respect  the  authorities 
shall  assign  it  to  the  proper  association.  Every  mem- 
ber has  a  vote  and  is  eligible  to  election  as  a  director 
and  an  agent  of  the  association,  which  honorary  (un- 
salaried) offices  cannot  be  declined  under  penalty  of 
fine,  except  for  reasons  justifying  declination  of  guar- 
dianship. 

The  law  of  June  30,  1900,  amending  the  acci- 
dent insurance  laws,  thus  provides  for  the  institution 
of  new  associations  and  the  rearrangement  of  existing 
ones.  The  establishment  of  accident  association  for  the 
branches  of  industry  newly  subjected  to  accident  insur- 
ance according  to  article  1  of  the  industrial  accident 
insurance  law,  or  their  assignment  to  existing  accident 
associations,  is  accomplished  by  the  federal  council 
after  consultation  with  the  representatives  of  the 
branches  of  industry  and  the  associations  concerned. 
Until  the  constitution  of  the  accident  associations  estab- 
lished under  this  law  shall  have  been  approved, 
branches  of  industry  may  be  withdrawn  by  decree  of 
the  federal  council,  after  consultation  with  the  boards 
of  directors  of  th6  associations   concerned,   from  one 


[37] 

of  the  accident  associations  established  under  the  law 
of  July  6,  1 884 ;  of  May  28.  1 885 ;  of  July  1 1 . 
1887;  and  of  July  13,  1887,  and  assigned  to  an- 
other association,  without  reference  to  the  provisions  of 
these  laws. 

In  the  newly  established  accident  association  the 
constitution  shall  be  adopted  by  a  constituent  general 
meeting.     This  consists  of  delegates  from  chambers  of 
commerce,   chambers  of  industry  or  similar   represen- 
tative economic  organizations  to  which  the  employers 
of  the  branches  of  industries  concerned  belong.     The 
central  state  authorities  designate  those  bodies  which 
are   authorized   to   send   delegates   and   determine   the 
number  of  delegates  for  each  according  to  its  economic 
importance.     If  the  territory  of  the  accident  association 
covers  the  territory  of  more  than  one  state,  the  bodies 
authorized  to  send  delegates  and  the  number  of  dele- 
gates  which   each   may   send   are   determined   by   the 
imperial  chancellor  after  agreement  with  the  state  gov- 
ernments concerned.    The  imperial  insurance  office  shall 
call  the  constituent  general  meeting  and  shall  conduct 
the  proceedings  until  a  provisional  board  of  directors 
shall  have  been  elected.      The  general  meeting  con- 
sists of  all  the  members,  unless  the  constitution  places 
it  on  a  representative  basis,  as  where  the  association 
is  divided  into  sections.      The  general  meeting  elects 
directors,  amends  the  constitution,  audits  and  accepts 
the  annual  balance  sheet  unless  it  confides  this  to  a 
committee,    determines   the    rules   respecting   the   legal 
relations  and  the  appointment  of  officials,   establishes 
rules   for   classifying   establishments   according   to   the 
degree  of  accident  risk  in  them  and  for  determining 
the  amount  of  contributions  in  the  different  establish- 
ments (i.e.,  the  risk  tariff). 

The  board  of  directors  determines  the  compensa- 
tion. The  fund  for  compensation  and  expenses  is 
raised  annually  by  contributions  assessed  on  the  basis; 
first,  of  the  wages  earned  in  their  respective  establish- 
ments by  the  persons  insured,  or,  in  certain  cases,  of  the 
local  daily  wage  of  the  adult  day  laborer ;  and,  second, 
of  the  risk  tariff  provided  for  in  the  constitution.  When- 
ever an  accident  is  caused  by  an  employer  intentionally 
or  "through  negligence,  with  omission  of  that  degree 
of  caution  which  is  especially  required"  of  him  in 
virtue  of  his  position  the  association  shall  in  the  first 


[38] 

case,  and  may  in  the  second,  hold  him  liable  for  its 

outlay. 

Contributions  may  be  collected  in  advance  for  the 
first  year.  Unless  the  constitution  provides  otherwise, 
these  shall  be  made  in  proportion  to  the  number  of 
persons  who  are  employed  by  the  members  of  their 
respective  establishments.  When  the  association  is 
divided  into  geographical  sections  the  constitution  may 
require  not  more  than  75  per  cent  of  the  compensation 
to  be  borne  by  the  section  wherein  the  accident  occurs. 
Associations  may  unite  for  the  joint  payment  of  com- 
pensation for  which  they  are  jointly  responsible. 

The  risk  tariff,  which  is  framed  by  the  general 
meeting  subject  to  the  approval  of  the  imperial  insur- 
ance office,  is  the  basis  for  classifying  the  several  estab- 
lishments according  to  the  degree  of  accident  risk  and 
for  determining  the  amount  of  their  contributions.  After 
the  first  two  years  the  tariff  shall  be  revised  every  five 
years  in  the  light  of  the  accidents  that  have  occurred 
in  the  different  establishments.  The  revision  is  sub- 
mitted to  the  general  meeting  with  a  statement  of  the 
compensated  accidents  in  each  establishment  and  may 
be  adopted  if  the  imperial  insurance  office  shall  ap- 
prove. The  general  meeting  may  then  for  the  ensu- 
ing period  impose  supplementary  contributions  or  grant 
returns  of  contribution  to  employers  according  to  the 
accidents  that  have  occurred  in  their  establishments. 

Compensation  is  advanced  to  the  beneficiaries  by 
the  postal  administration  upon  orders  of  the  accident 
associations.  Once  a  year  the  central  postal  authorities 
send  to  the  association  statements  of  payments  made  and 
designate  the  postal  banks  to  which  the  amounts  due 
shall  be  paid.  These  amounts  are  then  collected  from 
the  members  by  the  board  of  directors. 

The  accident  association  shall  accumulate  a  re- 
serve fund.  For  its  accumulation  there  shall  be  levied, 
when  the  first  period  for  the  payment  of  insurance 
contributions  arrives,  a  supplementary  assessment  of 
300  per  cent  of  such  contributions ;  at  the  second  period 
200  per  cent;  at  the  third,  150  per  cent;  at  the  fourth 
100  per  cent;  at  the  fifth,  80  per  cent;  at  the  sixth, 
60  per  cent;  and  thereafter  10  per  cent  less  at  each 
period  imtil  the  eleventh  period.  After  the  close  of 
the  first  eleven  years,  or  provided  that  the  eleventh 
year  has  already  been  passed  at  the  time  this  law  goes 


[39] 

into  effect,  from  the  latter  time,  the  accident  associa- 
tion shall  annually  add  to  the  amount  of  the  legal 
reserve,  for  three  years  1 0  per  cent,  and  then  for  each 
succeeding  period  of  three  years  I  per  cent  less  down  to 
4  per  cent,  including  the  interest  each  time.  After  the 
expiration  of  this  time  such  amounts  shall  be  taken 
from  the  interest  of  the  reserve  fund  as  may  be  re- 
quired to  prevent  a  further  increase  in  the  average 
amount  of  the  contribution  required  per  insured  per- 
son. The  rest  of  the  interest  is  again  to  be  added  to 
the  reserve  fund. 

In  case  of  stringent  need,  the  association,  with  the 
approval  of  the  imperial  insurance  office,  may  use  the 
interest  of  the  reserve  and  even  encroach  on  the  prin- 
cipal of  the  reserve  before  the  accumulation  required 
above  has  been  attained.  Restitution  to  the  reserve 
shall  then  take  place  as  may  be  required  by  the  imperial 
insurance  office. 

The  associations  issue  regulations  for  arrange- 
ments to  be  made  and  orders  to  be  issued  by  the  mem- 
bers for  the  prevention  of  accidents  in  their  establish- 
ments, under  threat  of  punishment  for  failure  to  comply 
by  fines  of  not  more  than  1 ,000  marks  or  by  listing  the 
establishment  in  a  higher  risk  class,  or,  if  it  is  already 
in  the  highest  class,  by  the  imposition  of  surtaxes  of  not 
more  than  twice  the  amount  of  the  contribution.  Hie 
association  also  prescribes  rules  of  conduct  for  the 
insured  workmen  in  order  to  prevent  accidents  with 
a  penalty  of  not  more  than  six  marks  for  violation. 
The  regulations  shall  be  submitted  to  the  imperial  insur- 
ance office  and  shall  be  made  with  the  co-operation  of 
representative  workmen.  The  number  of  these  repre- 
sentatives shall  be  equal  to  the  directors  participating 
and  they  shall  have  full  voting  power.  There  shall 
be  sent  to  the  representative  of  the  workmen  a  draft 
of  the  rules  which  are  to  be  submitted  to  them  for  their 
consideration  and  adoption.  The  imperial  office  may 
consult  workmen's  representatives  before  approving  the 
rules.  Associations  shall  enforce  the  regulations  and 
to  this  end  may  authorize  inspectors  and  accountants  to 
investigate  the  establishments.  If  the  employer  fears 
that  the  inspection  of  his  business  by  the  technical  in- 
spectors of  the  association  may  result  in  the  disclosure  of 
a  trade  secret  or  in  injury  to  his  business  interests  he  may 
claim  the  privilege  of  having  the  inspection  conducted 


[40J 

by  other  experts.  Technical  experts  and  accountants 
shall  be  sworn  and  shall  not  disclose  any  information, 
"and  shall  refrain  from  copying  any  arrangement  or 
method  of  operation  within  the  establishment  which  are 
kept  secret  by  the  owner,  but  which  come  to  their 
knowledge,  provided  that  these  are  trade  secrets.'* 

The  compulsory  associations  of  Austria  and  Hun- 
gary differ  in  many  respects  from  the  German  model 
but  we  shall  show  only  certain  radical  differences  in 
organization.  In  Hungary  employers  and  employes  are 
grouped  in  an  association  called  the  national  workmen's 
sickness  and  accident  insurance  fund  to  which  are  affil- 
iated district  insurance  funds  of  local  operation.  The 
association  is  a  ** self-governing  organization  of  the 
employes  insured  against  sickness  and  accident  and  of 
their  employers"  under  the  supervision  of  a  state  work- 
men's insurance  office.  Austria  follows  Germany  in 
segregating  accident  from  sickness  insurance  but  the 
employments  are  not,  as  in  Germany,  grouped  by  indus- 
tries. They  are  grouped  by  districts  conterminous  with 
the  territorial  provinces  of  the  state  and  for  each  district 
there  is  an  insurance  institution  of  whose  directors  one- 
third  represent  the  employers,  one-third  the  workmen 
and  one-third  are  appointed  by  the  state.  Several 
states  prescribe  the  compulsory  association  of  employ- 
ers in  certain  circumstances.  In  Italy,  for  example, 
the  state  may  order  the  employers  in  a  particular  indus- 
try to  form  a  mutual  association  provided  there  be 
at  least  15,000  workmen  employed  therein. 

PERMISSIVE  INSURANCE 

We  have  remarked  that  most  Continental  states 
differ  from  Great  Britain  in  exempting  a  large  number 
of  employers  from  compulsory  compensation  either 
because  the  industry  is  non-hazardous  or  the  plant 
small.  But  some  of  them  offer  not  only  to  the  exempt 
employer  but  to  workmen  at  large  an  opportunity  to 
participate  in  the  insurance  system,  an  inducement  to 
the  former  being  release  from  civil  liability  for  acci- 
dent, and  to  the  latter  an  increased  compensation  if 
he  be  already  covered  by  the  law,  and  if  not  an  assur- 
ance of  indemnity.  This  opportunity  is,  for  example, 
given  by  the  laws  of  Germany,  France  and  Hungary. 


[41] 

INTERNATIONAL  QUESTIONS 

A  compensation  system,  being  part  of  the  muni- 
cipal law  of  the  state,  its  benefits  and  burdens  may 
be  presumed  to  affect  all  persons  within  the  jurisdic- 
tion, whether  they  be  foreigners  or  citizens,  and  none 
without  the  jurisdiction.  This  general  rule  is,  how- 
ever, frequently  supplemented  by  modifications  devised 
in  view  of  the  ramification*  of  industrial  enterprise  and 
the  migration  of  workmen. 

Considering  first  the  case  of  the  employers,  we 
find  that  an  employer  coming  in  from  abroad  is,  under 
some  systems,  subject  to  peculiar  obligations.  For 
example,  in  Germany  a  foreigner  temporarily  engaged 
in  business  may  be  required  to  double  the  normal 
contributions  to  the  proper  association  and  give  security. 
The  Hungarian  law  provides  that  an  undertaking  whose 
plant  extends  beyond  the  country  is  subject  to  insur- 
ance in  one  state  only — the  location  of  the  principal 
office  being  the  controlling  factor.  If,  however,  the 
undertaking  has  a  permanent  representative  in  Hun- 
gary the  local  law  governs  the  Hungarian  workmen. 
A  treaty  between  Germany  and  the  Netherlands,  Au- 
gust 27,  1907,  deals  with  compensation  in  undertak- 
ings carried  on  in  both  states. 

Coming  to  migratory  workmen  we  first  consider 
the  case  of  citizens.  Several  systems  provide  that  when 
a  domestic  employer  employs  a  citizen  beyond  the  ter- 
ritory the  compensation  law  follows  the  person  unless 
he  is  entitled  to  compensation  under  the  foreign  law, 
for  example,  Hungary.  The  position  of  a  workman 
or  his  dependents  who  leave  the  country  during  the 
term  of  an  accident  pension  depends  on  the  statute. 
Germany  continues  payment  so  long  as  the  pensioner  • 
reports  to  the  German  consul.  Great  Britain  stops 
payment  except  in  case  of  permanent  injury.  In  Swe- 
den a  pension  is  suspended  during  absence.  In  some 
countries  a  lump  sum  may  be  reclaimed  in  settlement, 
for  example,  Hungary. 

In  the  relation  the  rule  in  federated  nations  is  of 
interest,  and  we  note  that  the  German  Empire  is, 
for  this  purpose,  one  country.  The  Prussian,  Bava- 
rian, the  Saxon,  moving  about  within  the  Empire,  may 
draw  his  pension  wherever  he  happens  to  reside. 


[42] 

Foreign  workmen  are,  as  a  rule,  within  the  bene- 
fits of  the  law,  and  if  they  become  pensioners  are  on 
the  footing  of  citizens  so  long  as  they  remain.  Some 
laws  provide  that  if  they  leave  the  country  they  may 
receive  lump  sums  in  settlement — sums  amounting  to 
three  times  the  annual  pension  in  Germany  and  France. 
The  dependents  of  a  foreign  workman,  if  they  are  also 
residents,  usually  stand  in  his  shoes,  but  their  position 
may  depend  upon  the  practice  in  their  own  country; 
for  example,  France,  Sweden  and  Germany.  In  this 
connection  we  note  that  recent  development  of  inter- 
national law — conventions  dealing  with  various  indus- 
trial conditions.  Among  them  are  several  which  con- 
fer reciprocal  benefits  in  the  matter  of  workmen's  com- 
pensation. 

PARTIES  TO  ADMINISTRATION 

The  parties  interested  in  a  workman's  compensa- 
tion scheme  are  the  state,  which  orders  compensation, 
the  employer,  who  pays  it,  and  the  workman,  who  re- 
ceives it,  and  it  is  of  interest  to  understand  to  what 
extent  each  participates  in  the  administration  of  rep- 
resentative systems. 

Under  the  British  workman's  compensation  act  the 
home  secretary  may  appoint  medical  referees  and  cer- 
tifying surgeons,  and  may  add  to  the  hst  of  industrial 
diseases.  County  court  judges  act  as,  or  appoint, 
arbitrators  in  a  compensation  case  where  the  parties  do 
not  agree.  The  registrar  of  Friendly  Societies  is  au- 
thorized to  decide  whether  a  compensation  arrange- 
ment between  employer  and  employe  shall  be  substi- 
tuted for  the  act.  The  post  office  offers,  but  does  not 
force,  its  assistance  in  the  matter  of  providing  armui- 
ties.  In  short,  the  act  operates  with  comparatively 
little  intervention  by  the  state — a  condition  accounted 
for  by  anti-bureaucratic  traditions  which,  though  some- 
what weakened  of  late,  are  not  yet  abandoned.  On 
the  continent  of  Europe,  where  bureaucracy  is  thor- 
oughly established,  the  functions  of  government  are 
more  or  less  intimate. 

Coming  to  the  other  parties  interested,  we  find 
that  neither  the  British  nor  the  French  systems  afford 
room  for  either  employer  or  workmen  to  undertake 
formal  responsibility  for  administration,  with  the  impor- 


[43] 

m 

tant  qualification  that  the  British  law  provides  for  a 
registered  agreement  between  them  by  which  most 
claims  are  settled.  Germany  gives  to  the  employers 
the  prominent  place  in  administration.  Their  associa- 
tions are  the  keystone  of  the  whole  system  and,  whilst 
efficiently  supervised,  are  granted  a  large  measure  of 
self-government.  In  Austria  and  Hungary  employ- 
ers are  substantially  represented  in  the  associations. 
While  the  German  workman  is  not  admitted  to  the 
employers'  associations,  representative  workmen  co- 
operate with  them  in  framing  regulations  for  the  pre- 
vention of  accidents,  and  are  given  a  place  in  the  arbi- 
tration courts  to  which  are  made  the  first  appeals.  In 
Hungary  workmen  are  represented  on  both  the  major 
and  the  minor  insurance  associations — the  national  and 
the  district  funds — and  in  Austria,  in  the  trade  associa- 
tions of  each  district. 

REVIEW  OF  FOREIGN   LAWS 

Our  survey  of  foreign  laws,  short  as  it  is,  needs 
an  accentuation  of  several  points.  Each  country  has, 
generally  speaking,  legislated  with  deliberation — in 
many  instances  after  years  of  study  and  discussion.  All 
the  systems  confer  upon  the  workmen  within  their  pur- 
view a  legal  right  to  fixed  compensation  for  industrial 
accidents  not  caused  by  their  willful  act,  but  except 
the  English,  which  covers  all  workmen  except  the 
"casual,*'  they  generally  exclude  workmen  who  are  not 
engaged  in  "hazardous"  employments. 

The  right  to  compensation  everywhere  revolution- 
izes the  old  law  limiting  employer's  liability  to  cases 
involving  his  actual  or  at  most  his  constructive  fault. 
It  is  based  upon  the  novel  economic  dogma  that  indus- 
try should  bear  the  burden  of  its  accidents  by  compen- 
sating the  victims.  There  is  no  disposition  to  make 
good  to  the  victim  the  entire  loss.  Partial  indemnity 
only  is  prescribed,  and  this  is  generally  based  on  his 
earning  capacity  as  evidenced  by  his  wages.  The 
compensation  is  usually  paid  by  the  employer  (with  the 
important  exception  of  the  German  sickness  insurance 
funds  covering  a  large  proportion  of  accidents  and  cre- 
ated largely  by  workmen's  contributions)  and  the  out- 
lay is  supposed  to  be  charged  to  cost  of  production. 


[44] 

All  the  leading  countries,  except  Great  Britain, 
deny  actions  for  damages  to  workmen  entitled  under  a 
compensation  law,  except  where  the  master  is  in  gross 
fault. 

All  countries  eliminate  trial  by  jury  from  the  pro- 
cedure in  disputed  claims;  and,  France  excepted,  the 
more  important  countries  do  not  prescribe  a  special 
action  in  the  ordinary  courts  but  provide  a  scheme 
of  arbitration.  In  short,  the  maxim  *'he  gives  twice  who 
gives  quickly*'*  so  conspicuously  pertinent  in  the  case 
of  injured  workmen,  is  reflected  in  as  summary  and 
untechnical  a  procedure  as  is  deemed  compatible  with 
justice    to    both    parties. 

The  wider  the  distribution  of  the  burden  of  com- 
pensation the  lighter,  of  course,  is  its  incidence  upon 
individual  employers  and  the  greater  the  security  of  the 
beneficiaries.  Distribution  implies  the  employment  of 
some  method  of  insurance,  and  the  several  systems  are 
broadly  classified  according  to  their  attitude  toward 
insurance. 

Great  Britain  typifies  the  systems  which  officially 
take  no  account  of  insurance — each  employer  may  in- 
sure or  not  at  discretion  and  does  not  shift  his  per- 
sonal liability  by  so  doing. 

France  typifies  another  sort  of  voluntary  insur- 
ance whereby  the  employer  may  shift  his  liability  by 
insuring  in  an  approved  institution. 

In  systems  of  the  third  class  insurance  is  compul- 
sory and  may,  as  in  Germany,  be  necessarily  involved 
in  the  collective  liability  imposed  upon  groups  of 
employers.  Or,  as  in  the  Netherlands,  employers  may 
be  required  to  insure  in  designated  institutions. 

Except  in  Great  Britain  and  some  of  her  depend- 
encies it  is,  generally,  the  rule  that  insurance  by  a  pre- 
scribed or  approved  method  discharges  the  employer 
from  personal  responsibility  for  compensation. 

The  systems  of  continental  Europe  are,  as  a  rule, 
more  highly  organized  and  more  thoroughly  worked  out 
than  the  British  system,  which,  indeed,  is  crude  in  com- 
parison. And  a  reason  for  this  difference  is  that  the 
state  socialism,  which  underlies  all  systems,  thrives 
best  in  communities  accustomed  to  paternalism  and  dis- 
ciplined to  bureaucracy. 


[45] 

The  laws  of  the  several  countries  agree  in  their 
general  aim.  Certain  classifications  by  groups  are  more 
or  less  marked.  Instances  of  borrowing  and  adaption 
are  many.  But  in  the  last  analysis  each  country  has 
gravitated  to  a  system  whose  spirit  and  form  are  com- 
mended by  racial  and  political  characteristics,  by  local 
habits  and  customs.  Broadly  speaking  it  appears  that 
those  systems  work  most  smoothly  where  existing  insti- 
tutions of  one  kind  and  another  capable  of  facilitating 
their  purpose  have  been  skillfully  utilized  to  this  end. 

COMPULSORY  COMPENSATION  IN  THE  UNITED 

STATES 

As  stated  heretofore  in  this  report  three  states  have  lately 
enacted  compulsory  compensation   laws. 

A  New  York  law  of  June  25.  1910,  entitled  "An  act  to 
amend  the  labor  law,  in  relation  to  workmen's  compensation  in 
certain  dangerous  employments"  provides  (Article   14  a): 

Sec.  215.  This  article  shall  apply  only  to  work- 
men engaged  in  manual  or  mechanical  labor  in  the  fol- 
lowing employments,  each  of  which  is  hereby  deter- 
mined to  be  especially  dangerous,  in  which  from  the 
nature,  conditions  or  means  of  prosecution  of  the  work 
therein,  extraordinary  risks  to  the  life  and  limb  of 
workmen  engaged  therein  are  inherent,  necessary  or 
substantially  unavoidable,  and  as  to  each  of  which 
employments  it  is  deemed  necessary  to  establish  a  new 
system  of  compensation   for  accidents  to  workmen. 

1.  The  erection  or  demolition  of  any  bridge  or 
building  in  which  there  is,  or  in  which  the  plans  and 
specifications  require,  iron  or  steel  frame  work. 

2.  The  operation  of  elevators,  elevating  ma- 
chines or  derricks  or  hoisting  apparatus  used  within  or 
on  the  outside  of  any  bridge  or  building  for  the  con- 
veying of  materials  in  connection  with  the  erection 
or  demolition  of  such  bridge  or  building. 

3.  Work  on  scaffolds  of  any  kind  elevated 
twenty  feet  or  more  above  the  ground,  water,  or  floor 
beneath  in  the  erection,  construction,  painting,  altera- 
tion or  repair  of  buildings,  bridges  or  structures. 


L46J 

4.  Construction,  operation,  alteration  or  repair 
of  wires,  cables,  switchboards  or  apparatus  charged 
with  electric  currents. 

5.  All  work  necessitating  dangerous  proximity 
to  gunpowder,  blasting  powder,  dynamite  or  any  other 
explosives  where  the  same  are  used  as  instrumentahties 
of  the  industry. 

6.  The  operation  on  steam  railroads  of  loco- 
motives, engines,  trains,  motors  or  cars  propelled  by 
gravity  or  steam,  electricity  or  other  mechanical  power, 
or  the  construction  or  repair  of  steam  railroad  tracks 
and  road  beds  over  which  such  locomotives,  engines, 
trains,  motors  or  cars  are  operated. 

7.  The  construction  of  tunnels  and  subways. 

8.  All  work  carried  on  under  compressed  air. 

Sec.  217.  If,  in  the  course  of  any  of  the  em- 
ployments above  described,  personal  injury  by  accident 
arising  out  of  and  in  the  course  of  the  employment  after 
this  article  takes  effect  is  caused  to  any  workman 
employed  therein,  in  whole  or  in  part,  or  the  damage 
or  injury  caused  thereby  is  in  whole  or  part  contributed 
to   by 

(a)  A  necessary  risk  or  danger  of  the  employ- 
ment or  one  inherent  in  the  nature  thereof;  or 

(b)  Failure  of  the  employer  of  such  workman  or 
any  of  his  or  its  officers,  agents  or  employes  to  exercise 
due  care,  or  to  comply  with  any  law  affecting  such  em- 
ployment; then  such  employer  shall,  subject  as  herein- 
after mentioned,  be  liable  to  pay  compensation  at  the 
rates  set  out  in  219-a  of  this  title;  provided  that  the 
employer  shall  not  be  liable  in  respect  of  any  injury 
which  does  not  disable  the  workman  for  a  period  of 
at  least  two  weeks  from  earning  full  wages  at  the 
work  at  which  he  was  employed,  and  provided  that  the 
employer  shall  not  be  liable  in  respect  of  any  injury 
to  the  workman  which  is  caused  in  whole  or  in  part 
by  the  serious  and  willful  misconduct  of  the  workman. 

Sec.  219-a.  The  amount  of  compensation  shall 
be  in  case  death  results  from  injury: 

(a)  If  the  workman  leaves  a  widow  or  next 
of  kin  at  the  time  of  his  death  wholly  dependent  on  his 
earnings,  a  sum  equal  to  twelve  hundred  times  the  daily 


L47] 

earnings  of  such  workman  at  the  rate  at  which  he  was 
being  paid  by  such  employer  at  the  time  of  the  injury 
subject  as  hereinafter  provided,  and  in  no  event  more 
than  $3,000.  Any  weekly  payments  made  under  this 
article  shall  be  deducted  in  ascertaining  such  amount. 

(b)  If  such  widow  or  next  of  kin  at  the  time 
of  his  death  are  in  part  only  dependent  upon  his  earn- 
ings, such  proportionate  sum  not  exceeding  that  pro- 
vided in  sub-division  (a)  as  may  be  determined  accord- 
ing to  the  injury  to  such  dependents. 

(c)  If  he  leaves  no  dependents,  the  reasonable 
expenses  of  his  medical  attendance  and  burial,  not  ex- 
ceeding $  1  00. 

Whatever  sum  may  be  determined  to  be  payable 
under  this  article  in  case  of  death  of  the  injured  work- 
man shall  be  paid  to  his  legal  representative  for  the 
benefit  of  such  dependents,  or  if  he  leaves  no  such 
dependents,  for  the  benefit  of  the  persons  to  whom  the 
expenses  of  medical  attendance  and  burial  are  due. 

2.  Where  total  or  partial  incapacity  for  work 
at  any  gainful  employment  results  to  the  workman 
for  the  injury,  a  weekly  payment  commencing  at  the 
end  of  the  second  week  after  the  injury  and  contin- 
uing during  such  incapacity,  subject  as  herein  provided, 
equal  to  50  per  centum  of  his  average  weekly  earnings 
when  at  work  on  full  time  during  the  preceding  year 
during  which  he  shall  have  been  in  the  employment 
of  the  said  employer,  or  if  he  shall  have  been  in  employ- 
ment of  the  same  employer  for  less  than  a  year,  than 
a  weekly  payment  of  not  exceeding  three  times  the  aver- 
age daily  earnings  on  full  time  for  such  less  period.  In 
fixing  the  amount  of  the  weekly  payment,  regard  shall 
be  had  to  the  difference  between  the  amount  of  the 
average  earnings  of  the  workman  before  the  accident 
and  the  average  amount  he  is  able  to  earn  thereafter 
as  wages  in  the  same  employment  or  otherwise.  In 
fixing  the  amount  of  the  weekly  payment,  regard  shall 
be  had  to  any  payment,  allowance  or  benefit  which 
the  workman  may  have  received  from  the  employer 
during  the  period  of  his  incapacity,  and  in  the  case  of 
partial  incapacity  the  weekly  payment  shall  in  no  case 
exceed  the  difference  between  the  amount  of  the  aver- 
age weekly  earnings  of  the  workman  before  the  acci- 
dent and  the  average  weekly  amount  which  he  is  earn- 


[48] 

ing  or  is  able  to  earn  in  the  same  employment  or 
otherwise  after  the  accident,  but  shall  amount  to  one- 
half  of  such  difference.  In  no  event  shall  any  com- 
pensation paid  under  this  article  exceed  the  damage 
suffered,  nor  shall  any  weekly  payment  payable  under 
this  article  in  any  event  exceed  $10  a  week  or  extend 
over  m.ore  than  eight  years  from  the  date  of  the  acci- 
dent. 

The  act  further  provides  inter  alia  that  no  existing  rights 
of  action  shall  be  affected  thereby,  but  that  one  who  brings 
an  action  shall  forfeit  claim  to  compensation;  also  that  "any 
question  which  may  arise  under  this  act  shall  be  determined 
either  by  agreement  or  by  arbitration  as  provided  in  the  code  of 
civil  procedure  or  by  an  action  at  law  as  herein  provided**  which 
action  "shall  be  conducted  in  the  same  manner  as  actions  at  law 
for  the  recovery  of  damages  for  negligence.** 

By  the  Montana  act  of  1910,  an  act  creating  a  state  acci- 
dent insurance  and  permanent  disability  fund  for  coal  miners,  it 
is  provided  that  "all  workmen,  laborers  and  employes  employed 
in  and  around  any  coal  mines  or  in  and  around  any  coal  washers 
in  which  coal  is  treated,  except  office  employes,  superintendents 
and  general  managers,  shall  be  insured  in  accordance  with  the 
provisions  of  this  act,  against  accidents  occurring  in  the  course 
of  their  occupation.*'  The  operators  shall  pay  to  the  auditor  of 
this  state  within  five  days  after  the  monthly  payment  of  wages 
1  cent  per  ton  on  the  tonnage  of  coal  mined  and  shipped  or  ready 
for  shipment,  and  operatives  shall  submit  to  a  deduction  of  1 
per  cent,  of  their  gross  monthly  earnings  which  shall  be  paid  by 
the  operators  to  the  state  auditor  within  five  days  after  the  pay- 
ment of  monthly  wages.  The  amount  so  paid  to  the  auditor  is 
called  a  "tax.**  The  auditor  shall  pay  the  moneys  to  the  state 
treasurer,  who  shall  place  them  in  a  distinct  fund  called  the 
employes  co-operative  insurance  and  total  permanent  disability 
fund.  The  auditor  "upon  being  satisfied  by  adequate  evidence  of 
accidental  death**  shall  issue  a  warrant  upon  the  treasurer  to  the 
dependents  of  the  deceased  in  the  sum  of  $3000.  A  workman 
receiving  permanent  injury  shall  receive  a  monthly  compensation 
of  not  more  than  $1  per  day  for  each  working  day.     Loss  of  a 


[49] 

limb  or  an  eye  shall  be  compensated  for  in  the  sum  of  $1000. 
**If  there  are  no  funds  available  to  pay  the  auditor's  warrant  this 
shall  draw  interest  at  the  rate  of  10  per  cent  per  annum  until 
such  warrant  is  called  for  payment  by  the  treasurer  which  shall 
be  as  soon  as  the  fund  is  sufficient  to  pay  the  same  with  its  inter- 
est then  due.**  When  any  monthly  payment  has  been  made,  the 
beneficiary  may  claim  a  lump  sum  not  in  excess  of  $3000,  from 
which  any  payments  already  made  shall  be  deducted.  The  auditor 
"shall  have  plenary  power  to  determine  all  disputed  cases  which 
may  arise  in  his  administration  not  herein  provided  for  and  to 
recommend  in  his  report  the  rates  or  premiums  necessary  to  pre- 
serve such  fund  and  shall  order  paid  such  indenmifications  as 
herein  provided.  He  shall  have  power  to  define  the  insurance 
provisions  of  this  act  by  regulations  not  inconsistent  therewith  and 
shall  prescribe  the  character  of  the  monthly  or  other  reports 
required  of  the  parties  hable  hereunder  and  the  character  of  the 
proofs  of  deaths  or  total  permanent  disability,  and  shall  have 
power  to  make  all  other  orders  and  rules  necessary  to  carry  out 
the  true  intent  of  this  act.**  Acceptance  of  benefits  shall  relieve 
the  employers  from  liability  to  suit  and  the  commencement  of  a 
suit  shall  operate  as  a  forfeiture  of  the  right  to  benefits. 

The  preamble  to  a  Maryland  statute  reads  as  follows: 

An  act  to  create  a  fund  for  the  relief  and  sus- 
tenance of  employes  injured  in  coal  and  clay  mining  in 
Alleghany  and  Garrett  counties,  and  the  dependents  of 
employes  injured  or  killed  in  such  mining,  and  provid- 
ing for  the  imposition  of  a  tax  of  27  cents  per  month, 
for  such  employe,  upon  all  employers  engaged  in  the 
business  of  cocJ  and  clay  mining,  in  said  counties,  and 
for  a  like  tax  upon  each  employe  to  be  deducted  from 
his  monthly  wages  by  the  employer,  both  taxes  to  be 
paid  monthly,  and  a  report  made  thereon,  to  the  treas- 
urers of  said  counties  by  such  employers,  the  same  to 
be  kept  by  the  treasurers  in  distinct  funds  to  be  known 
as  'miners*  and  operators'  co-operative  relief  fund,'  pro- 
viding for  certain  payments  therefrom  under  the  orders 
of  the  county  commissioners,  as  relief  money,  to  per- 
sons injured  and  disabled  while  in  the  discharge  of  their 
duties  in  or  about  such  mines,  and  for  the  payment  of 
relief  money  to  the  extent  of  $1,500,   under  orders 


[50] 

of  the  county  commissioners,  to  the  personal  representa- 
tives of  such  employe  who  may  meet  death  in  the  dis- 
charge of  his  duties,  for  the  relief  and  sustenance  of  the 
indigent  dependents  of  such  employe;  defining  the  ad- 
ministrative powers  and  duties  of  such  commissioners 
in  relation  to  such  relief  fund,  and  their  right  to  enforce 
the  payment  of  the  tax,  providing  for  advancements  by 
the  treasurer  of  one  county  to  the  treasurer  of  the  other 
to  cover  temporary  depletions  of  such  county  fund, 
and    for    the    remission   of    the    tax   when   such    fund 

reaches  $50,000; exempting  parties 

complying  with  this  act  from  suits  for  injuries,  disa- 
bility and  death  sustained  by  their  employes,  when  relief 
has  been  accepted  or  sued  for  under  this  act; 

Whereas,  it  is  the  duty  of  the  government  to  pro- 
vide sustenance  in  the  case  of  helpless  indigence  to  those 
who  are  or  may  become  paupers  and  charges  upon  the 
public  and  is  the  settled  practice  of  governments  to  do 
so;  and 

Whereas,  experience  has  shown  that  the  occu- 
pation of  coal  and  clay  mining  in  Alleghany  and 
Garrett  counties  is  attended  with  peril  peculiar  to  the 
occupation  itself,  and  that  a  great  number  of  employes 
in  the  mines,  v^thout  estates  and  having  large  families 
and  dependents,  are  annually  disabled  or  killed  in  con- 
sequences of  injuries  sustained  in  their  employment  and 
they  and  their  families  become  objects  of  charity  and 
charges  upon  the  public  authorities,  and  their  infant 
children  are  unable  to  secure  the  proper  support  and 
education ;   and 

Whereas,  it  appears  that  such  injuries,  disabil- 
1  ities  and  death  occur  with  such  regularity  as  to  be  sus- 

ceptible of  approximation  in  advance  and  are  inherent 
in  the  occupation  and  a  part  of  the  business  itself  and 
the  monetary  loss  therefrom  ought  to  be  charged  up 
to  the  occupation  and  business;  and  ! 

Whereas,  sound  policy  requires  that  some  provi- 
sion be  made  for  the  sustenance  of  the  family  and 
dependents  of  such  injured  or  disabled  employe  and  the 
widows  and  infant  children  and  dependents  of  such 
employe  when  death  results  from  such  injuries,  etc. 

The  country  treasurer  shall  make  payments  when  directed 
by  the  county  commissioners;  specific  amounts  are  paid  for  speci- 


[51] 

fie  injuries;  e.  g.,  loss  of  hands  or  blindness  $750;  there  is  paid 
in  addition  $1  a  day  during  medical  treatment  of  not  more  than 
twenty-six  weeks;  for  total  disability  other  than  specified,  $1  a 
day  for  not  more  than  fifty-two  weeks;  in  case  of  death  within 
a  year  payment  of  $1500,  less  what  may  have  been  paid  as 
above.  Commissioners  shall  determine  what  dependents  are 
entitled,  how  much  they  shall  receive,  and  whether  in  lump  sums 
or  allowances,  and  they  may  invest  $750  in  home  for  wddow  and 
infants.  The  bringing  of  suit  for  damages  forfeits  rights  under 
the  act. 

It  is  perhaps  too  early  to  judge  what  the  result  will  be  upon 
the  laborer  of  the  adoption  of  the  workingmen*s  compensation 
act  in  New  York,  but  some  idea  may  be  gained  of  its  effect  upon 
the  employer  by  the  action  of  insurance  campanies  who  insure 
against  employer's  liability.  It  seems  that  at  the  same  time  that 
the  compensation  act  went  into  effect  in  New  York,  a  new 
employer's  liability  act  also  went  into  effect,  which  modified  the 
employer's  defenses  in  an  action  for  injury.  In  a  circular  letter 
of  Walter  Drew,  commissioner  of  the  National  Erectors'  Asso- 
ciation of  New  York,  dated  November  4th,  the  situation  as  to 
insurance  under  the  two  acts  is  stated  as  follows: 

Insurance  Rates,  Employers,  especially  in  the 
trades  affected  by  the  compensation  act,  should  pay 
careful  attention  to  the  question  of  insurance  rates  under 
the  new  laws  before  taking  contracts.  These  rates 
have  been  so  largely  increased  as  to  form  an  appreciable 
item  in  determining  cost.  It  will  be  noted  that  under 
the  compensation  act,  the  workman  has  the  option  of 
claiming  under  that  act  or  under  the  liability  law.  If 
he  has  a  strong,  clear  case,  he  will  probably  claim  under 
the  liability  law,  as  the  chance  for  large  damages 
would  be  better.  If,  however,  he  has  a  case  in  which 
the  employer  would  not  be  liable  at  all  under  the  liabil- 
ity act,  he  will  claim  under  the  compensation  act.  The 
employer,  of  course,  must  be  insured  against  his  risk 
under  both  acts. 

The  rates  established  in  the  iron  trade  are  $7.50 
per  $100  on  the  pay  roll  for  the  employers'  liability 
act;  $5  for  the  compensation  act,  and  $3  for  public 
insurance,  on  buildings  where  steel  framework  is  called 


[52] 

for  in  the  plans.  The  rate  for  steel  frame  buildings 
is  in  all  the  trades  much  higher  than  in  other  buildings. 
Printers,  steam  fitters,  plumbers,  plasterers  and  many 
other  trades  will  have  to  pay  on  steel  buildings  a  rate 
of  $2  for  compensation,  $1.25  for  employers' 
liability.  In  the  masons*  trade  on  steel  buildings,  the 
rate  under  the  compensation  act  will  be  $3.25  per 
$100,  and  the  entire  rate,  including  compensation  act, 
liability  act  and  public  insurance  will  be  $7.25. 

In  addition  to  all  this,  is  a  new  risk  imposed  by 
the  statute  on  contractors  who  employ  sub-contractors, 
as  they  are  made  liable  for  accidents  to  the  sub- 
contractors* workmen.  For  this  contingent  liability,  the 
rate  of  60c  for  each  $  1 00  of  the  entire  cost  of  a  steel 
building  will  be  charged  and  50c  per  $100  for  other 
buildings. 

The  above  rates  are  based  on  a  limit  of  liability 
of  $5000  to  one  p)erson,  and  $10,000  to  more  than 
one  in  any  one  accident  If  these  limits  are  doubled, 
there  wall  be  an  increase  of  probably  30  per  cent  in  the 
rate.  If  all  the  sub-contractors  are  insured,  the  com- 
pany will  carry  the  contingent  liability  of  the  general 
contractor  at  the  rate  of  15  per  cent  per  $100  on  the 
cost  of  the  building.  If  they  are  not  insured  and  if  the 
general  contractor  pays  the  higher  rate  of  60c  for  con- 
tingent liability,  his  insurance  will  cover  the  liability  of 
the  sub-contractors  also. 

In  conclusion  in  this  letter  Mr.  Drew  says: 

A  large  contractor  who  had  begun  a  contract 
without  reference  to  the  change  in  liability  rates  under 
the  New  York  law,  now  finds  that  he  will  in  all  proba- 
bility be  able  to  complete  his  contract  only  at  a  loss. 
The  high  rates  under  the  New  York  act  should  fur- 
nish very  serious  food  for  thought  in  other  states  where 
statutes  of  this  kind  are  contemplated.  This  does  not 
mean  that  the  compensation  principle  is  not  correct. 
One  reason  for  the  very  high  New  York  rate  is  the 
fact  that  the  compensation  principle  is  not  in  full  and 
compulsory  operation.  The  workman  having  a  choice 
makes  it  necessary  for  the  employer  to  be  insured  under 
two  statutes  instead  of  one.  This  is  not  only  uneco- 
nomic, but  it  would  seem  to  mean  that  an  undue  pen- 
alty is  imposed  upon  the  employer  of  New  York  in 
trying  out  the  experiment  of  the  compensation  principle 
in   this   country. 


r53] 

In  addition  to  the  legislative  action  above  mentioned,  efforts 
have  been  made  in  some  instances  by  the  employer  and  the 
employe,  looking  to  some  alleviation  of  the  hardship  experienced 
by  the  employe  under  the  present  system  of  compensation. 

A  synopsis  of  some  of  the  plans  now  in  force  of  this  char- 
acter is  set  forth  in  Bulletin  No.  90,  bureau  of  labor,  Septem- 
ber, 1910,  and  we  present  them  herewith  as  found  in  the  bul- 
letin, excepting  the  plan  of  Deere  &  Company,  which  informa- 
tion is  obtained  from  the  printed  description  of  the  plan  before 
the  committee.  ^ 

UNITED  STATES  STEEL  CORPORATION 

A  striking  recent  illustration  of  this  form  of  action  is  found 
in  the  case  of  the  United  States  Steel  Corporation,  which  put  a 
new  accident  relief  system  into  operation  in  May  of  this  year 
for  a  trial  year.  This  corporation  has  a  pay  roll  of  nearly  a 
quarter  of  a  million  men,  and  while  many  of  its  branches  of  work 
involve  what  are  called  hazardous  employments,  all  classes  of 
employment  are  on  the  same  basis  as  to  the  benefits  of  the  relief 
system.  The  question  of  negligence  is  put  entirely  aside,  the  only 
condition  for  the  receipt  of  relief  being  that  there  shall  be  dis- 
abling accidental  injury  in  the  course  of  employment.  The 
injury  must  be  such  as  to  prevent  the  employe  from  following  "his 
usual  or  any  other  occupation."  The  bringing  of  a  suit  at  law 
bars  all  benefits  under  the  scheme.  The  employe  is -called  on  for 
no  contribution,  all  funds  being  supplied  by  the  Corporation. 

The  amount  of  benefits  paid  begins  with  18  months*  earn- 
ings as  death  benefits  for  married  men  living  with  their  families, 
the  scale  increasing  with  the  number  of  children  under  16  years 
of  age  and  with  length  of  service,  the  maximum  hmit  being 
$3,000.  Unmarried  employes  are  entitled  to  no  death  benefits 
other  than  funeral  expenses,  and  the  limitation  as  to  married 
men,  i.  e.,  "living  with  their  families,'*  apparently  cuts  off  non- 
resident families  of  alien  workmen  from  all  compensation  imder 
this  scheme.  Considerable  discretion  is  allowed  in  the  admin- 
istration of  both  death  and  disability  features  of  the  scheme,  and 
provision  is  made  for  medical  and  hospital  treatment.  Temporary 
disability  is  relieved  according  to  a  sliding  scale,  the  amount  not 


[54] 

to  exceed  $1.50  per  day  for  single  men  and  $2  per  day  for 
married  men.  Permanent  disability  cases  are  generally  to  be 
dealt  with  according  to  their  nature,  but  stated  rates  are  an- 
nounced for  the  loss  of  a  hand  (12  months'  wages),  the  loss  of 
an  arm  (18  months*  wages),  the  loss  of  a  foot  (9  months* 
wages),  the  loss  of  a  leg  (12  months'  wages),  and  the  loss  of 
an  eye  (6  months*  wages).  This  system  connects  itself  essentially 
and  naturally  with  measures  of  the  company  to  safeguard  its 
workmen  from  accidental  injury. 

INTERNATIONAL  HARVESTER  COMPANY 

Another  corporation  taking  an  important  step  in  the  same 
direction  is  the  International  Harvester  Company  and  associated 
companies,  the  system  becoming  effective  May  1,  1910.  TTiis 
scheme,  affecting  approximately  30,000  employes,  also  ignores 
the  customary  defenses  of  negligence,  assumed  risks,  and  fellow- 
servants,  only  intoxication  and  wailful  disregard  of  the  use  of 
safety  appliances  cutting  employes  off  from  the  benefit  of  the 
scheme.  No  distinction  is  made  between  employes  having  resi- 
dent and  those  having  non-resident  families.  Dependents  of 
employes  dying  as  the  result  of  accident  and  within  16  weeks  of 
its  occurrence  receive  three  years'  average  earnings,  but  not  less 
than  $1,500  nor  more  than  $4,000.  For  injury  causing  "ina- 
bility to  work  at  any  gainful  occupation  whatsoever,**  the  pay  is 
one-quarter  of  the  average  earnings  for  the  first  30  days  and  half 
pay  thereafter  for  not  more  than  1 04  weeks  from  the  date  of  the 
accident,  compensation  not  to  exceed  $20  a  week.  If  total  dis- 
ability continues  after  104  weeks,  the  workman  shall  receive 
during  such  continuance  an  annual  pension  equal  to  8  per  cent 
of  the  death  benefit  which  would  have  been  payable  in  case  of 
his  death,  but  not  less  than  $  1 0  per  month,  payments  to  be  made 
monthly.  The  loss  of  a  hand  or  a  foot  calls  for  the  payment  of 
one  and  one-half  years*  wages,  not  less  than  $500  nor  more  than 
$2,000;  the  loss  of  both  hands  or  both  feet,  or  one  hand  and  one 
foot,  four  years'  average  wages,  but  not  less  than  $2,000;  the 
loss  of  one  eye,  three-fourths  of  a  years*  wages;  and  of  both 
eyes  the  same  as  for  both  hands  or  feet.     By  the  contribution  of 


[55] 

small  sums — 6  cents  per  month  from  employes  earning  $50  or 
less  per  month,  8  cents  for  those  earning  more  than  $50  and  not 
more  than  $  1 00,  and  1 0  cents  from  those  earning  more  than  $  1 00, 
the  one-fourth  pay  for  the  first  thirty  days'  disability  may  be 
increased  to  one-half  pay  for  workmen  making  such  contributions. 
No  part  of  such  contributions  is  to  go  for  operating  expenses. 
Lump  sum  payments  may  be  arranged  for  in  lieu  of  weekly  pay- 
ments, and  the  acceptance  of  benefits  is  to  operate  as  a  release 
from  all  claims  against  the  company. 

NATIONAL  ASSOCIATIONS  OF  EMPLOYERS 

The  National  Metal  Trades  Association  announced  in  the 
spring  of  this  year  a  mutual  insurance  scheme  in  which  employes 
in  shops  managed  by  its  members  may  procure  insurance  cover- 
ing sickness  as  well  as  accidents  at  a  cost  of  $1  per  month.  No 
initial  deposit  or  membership  fee  is  required.  No  benefits  are 
paid  for  disability  lasting  not  more  than  seven  days,  but  if  it  lasts 
for  thirty  days  full  benefits  are  paid  for  the  whole  period.  The 
rates  of  benefit  vary  from  $20  to  $60  per  month,  according  to 
the  class  of  employment.  The  president  of  the  National  Cotton 
Manufacturers*  Association  advocates  the  establishment  of  a 
contributory  accident  insurance  system  for  the  cotton  industry, 
and  the  National  Manufacturers*  Association  has  had  a  committee 
at  work  since  early  in  the  current  year  investigating  the  question 
of  compensation  with  the  idea  of  drafting  measures  to  be  sub- 
mitted to  that  body.  The  report  of  this  committee  to  the  fifteenth 
annual  convention  of  that  body  in  May  last  shows  67  per  cent 
of  the  manufacturers  in  membership  with  the  association  to  be  in 
favor  of  a  voluntary  mutual  insurance  system  among  the  mem- 
bership, while  90  per  cent  are  dissatisfied  v^th  the  workings  of 
the  present  employers'  liability  laws  and  liabiHty  insurance  sys- 
tems. The  association  adopted  resolutions  very  much  in  agree- 
ment with  the  findings  of  the  New  York  commission  set  forth 
above  as  to  the  inadequacy  and  unsatisfactory  results  of  the 
present  liability  system,   the   fourth  resolution  being: 

That  we  recommend  to  our  members  the  inaugu- 
ration with  the  least  possible  delay  of  a  system  of  vol- 


[56] 

untary,  mutually  contributory  industrial  indemnity  insur- 
ance, this  system  to  be  elastic  enough  to  provide  for 
voluntary,  contributory  sickness,  old  age,  and  death 
insurance,  if  later  deemed  advisable. 

The  association  expressed  its  desire  **to  co-operate  with 
state  legislators  in  promoting  uniform,  sound  industrial  indemnity 
legislation,*'  while  opposing  unsound  legislation.  The  president 
and  directors  of  the  association  were  authorized  to  arrange  for 
the  estabHshment  of  a  suitable  plan. 

NATIONAL  CIVIC  FEDERATION 

The  National  Civic  Federation,  representing  employers,  em- 
ployes, and  the  public  at  large,  at  its  tenth  annual  meeting  in 
November,  1909,  made  the  matter  of  compensation  for  injured 
wage  earners  the  principal  subject  of  consideration,  carrying  the 
discussion  forward  to  its  conference  on  uniform  state  legislation 
in  January  last.  At  this  latter  meeting  it  was  resolved  to  recom- 
mend "that  the  workmen's  compensation  acts,  fair  to  the  employer 
and  employe  and  just  to  the  state,  be  uniformly  substituted  for 
the  present  system  of  employers'  liability  for  injuries  received  in 
and  arising  out  of  the  course  of  employment." 

AMERICAN  FEDERATION  OF  LABOR 

Organized  labor,  as  represented  by  the  American  Federa- 
tion of  Labor,  is  also  strongly  committed  to  the  idea  of  com- 
pensation, the  proceedings  of  the  convention  showing  the  growth 
of  this  sentiment  to  be  rapid  in  recent  years.  The  executive 
council  of  the  federation  has  prepared  four  bills  embodying  com- 
pensation provisions,  and  applicable  to  employment  generally,  to 
employes  of  the  federal  government,  to  dangerous  employments  in 
jurisdictions  subject  to  federal  control,  and  to  persons  employed 
in  interstate  and  foreign  commerce.  These  bills  were  indorsed 
by  the  annual  convention  of  the  federation  in  1909,  and  activity 
of  agitation  in  their  behalf  was  encouraged.  The  desirability  of 
uniform  enactments  was  dwelt  upon  in  this  connection — a  feature 
of  the  case  that  was  also  emphasized  in  the  discussions  by  the 
National  Civic  Federation  noted  above. 


[57] 

DEERE  &  COMPANY 

This  company  has  estabhshed  for  the  benefit  of  its  em- 
ployes a  system  of  benefit  insurance  for  disability  and  death  result- 
ing from  sickness  or  accident,  the  cost  of  which  insurance  is  equally 
divided  between  the  company  and  the  employes.  The  insurance 
begins  as  soon  as  the  employe  who  is  paid  through  the  weekly 
pay  roll  signs  the  employment  contract  and  begins  work  for  the 
company,  and  terminates  when  the  employe  is  discharged  or 
voluntarily  quits  or  without  notice  leaves  the  employ  of  the  com- 
pany. The  insurance  continues  sixty  days  after  the  employe  is 
temporarily  released  from  service  through  lack  of  work.  Insur- 
ance may  be  continued  by  regular  employe's  absence  from  work 
over  sixty  days  by  making  special  arrangements  with  the  employ- 
ment agency.  Sick  benefits  are  paid  in  accordance  with  the 
schedule,  and  in  case  of  death  from  sickness,  $100  death  benefit 
is  paid,  and  free  medical  attendance  is  furnished  not  to  exceed  one 
visit  per  day  by  one  of  the  company's  doctors  during  the  period 
covered  by  the  insurance.  Sick  benefits  and  medical  attendance, 
however,  are  furnished  only  to  members  who  have  been  in  the 
employ  of  the  company  four  consecutive  weeks  during  the  twelve 
months  previous  to  disability.  Death  benefits  are  payable  only 
in  case  of  death  of  the  employe  who  has  worked  for  the  com- 
pany continuously  during  three  months  just  previous  to  death  or 
has  worked  for  the  company  a  total  of  six  months  out  of  the 
twelve  months  just  previous  to  his  death. 

Accident  benefits  are  paid  to  members  or  surviving  widow, 
if  any,  and  if  none,  then  to  the  heirs  at  law  and  next  of  kin  as 
prescribed  by  the  laws  of  the  state  of  Illinois.  Said  benefits  are 
as  follows: 

(E)  Twelve  Months  Benefit. — One  dollar  per  day  for 
twelve  months  after  the  first  week,  for  disability  due  to  accident 
received  when  not  employed  othervyrise  than  by  and  for  the  com- 
pany. Benefits  claimed  for  accidents  not  occurring  at  the  com- 
pany's plant  will  be  considered  on  their  individual  merits. 

Disability  resulting  directly  or  indirectly  from  sun-stroke, 
carbuncles,  boils,  abscesses,  ulcers,  blood  poison  or  contact  with 


[58] 

poisonous  substances  or  infectious  substances,  is  not  classed  as  due 
to  accident. 

(F)  Surgical  Attendance. — Free  surgical  attendance  by 
the  company  5  surgeon. 

ACCIDENT  BENEFITS  FOR  SERIOUS  INJURY 

The  following  special  benefits  are  paid  to  employes  injured 
at  the  company's  plant: 

(G)  Death. — For  injuries  resulting  in  the  death  of  a 
member  before  the  expiration  of  the  benefit  period  as  in  E,  $  1 ,000 
shall  be  paid. 

(H)  Hands  and  Feet. — For  injuries  causing  the  imme- 
diate severing  of,  or  necessitating,  in  the  opinion  of  the  com- 
pany's surgeon,  the  amputation  of  both  hands,  or  both  feet,  or 
one  hand  and  one  foot,  the  member  shall  receive  $  1 ,000. 

(I)  For  injuries  causing  the  immediate  severing,  or  neces- 
sitating, in  the  opinion  of  the  company's  surgeon,  the  amputation 
of  one  hand,  or  one  foot,  the  member  shall  receive  $500. 

(J)  Eyes. — For  injuries  causing  total  loss  of  sight  of 
both  eyes  the  member  shall  receive  $  1 ,000. 

(K)  For  injuries  resulting  in  the  loss  of  sight  of 
one  eye,  the  member  shall  receive  $250. 

(L)  Finger. — For  injuries  resulting  in  the  loss  of  two 
joints  of  any  finger,  the  member  shall  receive  $100. 

Benefit  Effective  on  Day  of  Employment. — Accident  bene- 
fits in  paragraph  E  and  special  accident  benefits  become  effective 
as  soon  as  the  employe  starts  work  for  the  company. 

Benefits  After  One  Week's  Disability. — Benefits  as  stated 
in  paragraph  E  begin  after  one  week's  disability,  which  must 
be  certified  to  by  the  company's  surgeon. 

Half  Benefits. — One-half  the  benefits  as  stated  in  E  wdll  be 
paid  to  members  rated  at  less  than  1 5  c  per  hour. 

OPERATIONS 

Consult  Employment  Agent. — Any  member  who  desires  to 
have  an  operation  for  appendicitis,  stricture,  hernia,  hemorrhoids. 


[591 

or  any  chronic  trouble,  or  who  desires  special  treatment  for  eye 
or  ear  trouble,  will  consult  the  employment  agent  before  arrang- 
ing for  treatment. 

Other  Insurance. — If  the  employe  carries  other  sick  insur- 
ance making  a  total  indemnity  in  excess  of  the  employe's  regular 
wages,  the  company  will  pay  in  the  case  of  such  employe  only 
such  proportion  of  the  benefits  in  paragraphs  A  and  B  as  his 
regular  wage    bears  to  the  total  indemnity. 

PHYSICIANS 

Accident  Cases. — All  accident  cases  at  the  company's  plant 
must  be  handled  by  the  company's  surgeon. 

Assessments. — In  partial  payment  for  this  insurance  every 
man  on  the  company's  weekly  pay  rolls  will  be  charged  50c  on 
the  last  day  of  each  month. 

Half  Assessments. — Assessments  amounting  to  one-half  the 
above  will  be  charged  employes  rated  at  less  than  1 5  c  per  hour. 

It  is  provided  that  in  all  cases  the  acceptance  by  an  employe 
of  the  full  benefits  herein  provided  for  shall  release  all  claims 
against  the  company  for  any  liability  on  account  of  such  injuries 
or  sickness,  otherwise  one-half  of  the  benefits  herein  provided  for 
will  be  paid. 

In  addition  to  the  system  of  benefit  insurance  described 
above,  at  the  same  time  the  company  put  in  force  the  comprehen- 
sive system  of  pensions  by  which  all  employes  engaged  in  any 
capacity  in  the  operations  of  the  company  who  have  reached  the 
age  of  65  years  and  have  been  20  years  or  more  continuously  in 
the  service,  may  be  retired  from  active  service  and  become  eligible 
to  a  pension;  but  no  person  entering  the  employ  of  the  company 
later  than  the  age  of  45  years  is  eHgible  to  a  pension. 

It  is  further  provided  that  at  the  discretion  of  the  company 
any  employe  who  has  been  ten  years  or  more  continuously  in  the 
service  of  the  company  and  has  become  totally  incapacitated  for 
further  work  by  reason  of  injury  or  sickness,  may  or  may  not 
receive  aid  from  the  pension  fund;  and  if  it  is  granted,  it  shall 
be  for  such  amount  and  for  such  period  as  the  pension  board 
might  determine.  The  entire  amount  necessary  to  support  the 
pension  fund  is  furnished  by  the  company. 


[60] 

THE  LEGAL  PRINCIPLES  INVOLVED 

Not  only  have  the  numerous  commissions  and  other  bodies 
which  have  investigated  the  question  of  workingmen's  compensa- 
tion given  thought  and  study  to  the  question  along  economic  lines 
and  for  the  purpose  of  determining  what  has  already  been  done 
or  what  measures  would  be  suitable,  but  the  legal  phases  of  the 
situation  have  been  carefully  analyzed  and  studied.  We  have 
before  us  the  exhaustive  brief  of  the  constitutionality  of  working- 
men's  compensation  laws  compiled  by  Mr.  H.  V.  Mercer,  who 
was  the  attorney  of  the  Minnesota  Commission;  also  a  report 
of  Mr.  Samuel  A.  Harper,  who  was  the  attorney  for  the  Illinois 
Commission;  the  brief  of  Mr.  Carmen  F.  Randolph  of  New 
York,  which  is  elsewhere  herein  referred  to;  the  opinion  of  Samuel 
Williston,  LL.D.,  which  is  appended  as  ** Appendix  B'*  of  the 
Report  of  the  Conference  of  Commissions  held  in  Chicago,  No- 
vember, 1910,  and  the  article  written  by  Mr.  Lindley  D.  Clark, 
found  in  Bulletin  No.  90  of  the  bureau  of  labor.  It  is  not  the 
purpose  of  your  committee  to  present  an  exhaustive  brief  on  the 
principles  involved,  but  rather  in  a  general  way  to  point  out 
the  conclusions  which  have  been  reached  by  those  who  have  made 
a  minute  study  of  the  legal  phases  of  the  situation,  leaving  it  to 
those  who  may  be  interested  in  a  study  of  the  principles  involved 
to  resort  to  the  briefs  which  we  have  mentioned  or  to  original 
research  on  their  part. 

It  seems  to  be  conceded  that  whatever  authority  the  legis- 
lature may  have  to  adopt  the  legislation  which  seems  to  be  needed, 
it  must  find  its  justification  in  what  is  known  as  **the  police 
power."  In  this  connection  we  quote  from  the  article  by  Mr. 
Clark  above  mentioned — 

What  the  pohce  power  is,  is  not  capable  of  exact 
definition,  since  it  is  subject  to  growth  and  change 
wath  changing  industrial  and  social  conditions.  Under 
it  a  government  may  preserve  and  promote  the  public 
welfare  by  establishing  such  rules  and  regulations  for 
the  conduct  of  persons  and  the  management  of  business 
and  property  as  may  be  conducive  to  the  comfort,  wel- 
fare, and  safety  of  society.  Both  property  and  liberty 
are   held   on   such   reasonable   conditions   as   may   be 


[61] 

imposed  by  the  governing  power  of  the  state  in  the  exer- 
cise of  this  power,  and  with  such  conditions  and  pro- 
visions of  the  fourteenth  amendment  of  the  federal  con- 
stitution, declaring  that  no  state  shall  * 'deprive  any  per- 
son of  life,  liberty  or  property  without  due  process  of 
law,  nor  deny  to  any  person  within  its  jurisdiction  the 
equal  protection  of  the  laws,"  were  not  designed  to 
interfere;  but  every  exercise  of  the  police  power  is 
none  the  less  subject  to  inquiry  as  to  whether  it  is  fair, 
reasonable  and  appropriate;  or  whether,  on  the  other 
hand,  it  is  an  unreasonable,  unnecessary  and  arbitrary 
interference  with  the  right  of  individuals  to  their  per- 
sonal liberty. 

The  police  power  is  therefore  flexible  and  adapt- 
able to  the  needs  of  the  public  welfare  as  they  develop. 
The  idea  expressed  by  the  words  of  the  fourteenth 
amendment,  **due  process  of  law,"  is  hardly  less  broad. 
Though  the  words  differ,  the  same  idea  is  expressed  in 
the  phrase,  '*the  law  of  the  land.'* 

It  is  not  restricted  to  the  test  of  conformity  to 
process  or  jurisprudence  in  use  at  some  fixed  past  time, 
since  to  so  construe  it  would  unduly  restrict  and  ham- 
per procedure  and  deny  every  quality  of  the  law  but 
its  age  and  render  it  incapable  of  progress  or  improve- 
ment. Any  legal  proceeding  enforced  by  public  author- 
ity, whether  sanctioned  by  age  and  custom  or  newly 
devised  in  the  discretion  of  the  legislative  power  in  fur- 
therance of  the  general  public  good,  which  regards  and 
preserves  the  principles  of  liberty  and  justice,  must 
be  held  to  be  due  process  of  law.  The  state  is  not  tied 
down  by  any  provision  of  the  federal  constitution  to 
the  practice  and  procedure  which  existed  at  the  com- 
mon law.  Due  process  of  law  is  secured  if  the  laws 
operate  on  all  persons  alike. 

The  provision  guaranteeing  to  all  persons  the 
equal  protection  of  the  laws  is  satisfied  when  all  per- 
sons or  classes  in  like  conditions  and  circumstances 
enjoy  like  privileges  under  the  law.  It  does  not 
limit,  nor  was  it  intended  to  limit,  the  subjects  upon 
which  the  police  power  of  a  state  may  be  exerted, 
but  simply  requires  that  legislation  shall  treat  alike  all 
persons  affected  by  it.  The  greater  part  of  all  legis- 
lation is  special,  either  in  the  subjects  sought  to  be 
ascertained  by  it,  or  in  the  extent  of  its  application. 
Such  legislation  does  not  infringe  upon  the  clause  of 


L62] 

tne  fourteenth  amendment  requiring  equal  protection 
of  the  laws,  because  it  is  special  in  its  character.  When 
legislation  applies  to  particular  bodies  or  associations, 
imposing  upon  them  additional  liabilities,  it  is  not  open 
to  the  objection  that  it  denies  to  them  the  equal  pro- 
tection of  the  laws,  if  all  persons  brought  under  its 
influence  are  treated  alike  under  the  same  conditions. 
The  hazardous  character  of  the  business  of  operating 
a  railway  would  seem  to  call  for  special  legislation  with 
respect  to  railroad  corporations,  having  for  its  object 
the  protection  of  their  employes  as  well  as  the  safety 
of  the  public.  The  business  of  other  corporations  is 
not  subject  to  similar  dangers  to  their  employes,  and  no 
objections,  therefore,  can  be  made  to  the  legislation 
on  the  ground  of  its  taking  an  unjust  discrimination. 

The  hazardous  nature  of  an  industry  is  therefore 
an  adequate  reason  for  legislation  applying  to  its  con- 
duct, superseding  in  greater  or  less  degree  the  right 
of  contract  as  between  the  employer  and  his  workmen; 
and,  as  already  indicated,  it  is  in  part  on  this  fact  that 
the  New  York  statute  providing  for  compulsory  com- 
pensation in  specified  dangerous  employments  relies. 
Laws  abrogating  the  defense  of  common  employment 
either  generally  or  in  designated  industries  are  consti- 
tutional; so  of  laws  modifying  the  defense  of  assump- 
tion of  risks  and  of  contributory  negligence;  and  in 
general  it  is  no  objection  to  a  law  that  it  imposes  a 
measure  of  liability  on  an  employer  that  is  unknown  at 
common  law.  The  defenses  of  *'assumed  risks**  and 
"contributory  negligence"  are  frequently  abrogated  out- 
right in  cases  where  injury  results  from  the  failure  of 
an  employer  to  conform  to  a  standard  of  safety  fixed 
by  statute.  In  other  statutes  the  employe  is  declared 
to  have,  in  the  defined  circmstances,  the  same  rights  of 
action  and  recovery  as  if  he  had  not  been  an  employe. 

The  extent  to  which  such  a  declaration  carries  the 
matter  appears  from  a  consideration  of  statutes  that 
make  the  proprietors  of  an  undertaking  responsible  for 
injuries  resulting  from  its  conduct  without  personal 
fault.  Thus  a  Nebraska  statute  makes  railroad  com- 
panies liable  for  injuries  to  passengers  unless  the  injury 
is  the  result  of  criminal  negligence  of  the  person  injured 
or  of  his  violation  of  some  known  rule.  The  supreme 
court  of  the  state  in  upholding  this  statute,  said:  "The 
legislation  is  justified  under  the  police  power  of  the 


[63] 

state.  It  was  enacted  to  make  railroad  companies 
insurers  of  the  safe  transportation  of  their  passengers, 
as  they  were  of  baggage  and  freight."  The  Supreme 
Court  of  the  United  States  sustained  this  view,  quoting 
the  above  with  approval  and  adding:  "Our  juris- 
prudence affords  examples  of  legal  liability  without 
fault  and  the  deprivation  of  property  without  fault 
being  attributable  to  its  owner.  The  law  of  deodands 
was  such  an  example.  The  personification  of  the  ship 
in  admiralty  law  is  another.  Other  examples  are  af- 
forded in  the  liability  of  the  husband  for  the  torts  of 
the  wife,  the  liability  of  a  master  for  the  acts  of  his 
servant.*'  It  is  obviously  only  necessary  to  place  on 
the  statute  books  of  the  same  state  the  two  provisions 
last  cited,  i.  e.,  the  one  giving  the  employe  the  status 
of  a  third  person  and  one  making  the  undertaker  respon- 
sible for  damages  resulting  from  the  conduct  of  his 
business — to  attain  the  full  extent  of  the  protection  by 
compensation  legislation. 

A  text  writer  discussing  this  subject,  says:  "If 
the  rule  of  absolute  liability  is  held  to  be  unconstitu- 
tional, it  must  be  on  the  ground  that  justice  and  equity 
forbid  that  a  person  be  required  to  make  good  the 
loss  of  another  unless  some  fault  of  culpability  can  be 
imputed  to  him.  *  *  *  The  principle  that  inev- 
itable loss  should  be  borne,  not  by  the  person  on  whom 
it  may  happen  to  fall,  but  by  the  person  who  profits 
by  the  dangerous  business  to  which  the  loss  is  incident, 
embodies  a  very  intelligent  idea  of  justice  which  seems 
to  be  in  accord  with  modern  social  settlement.  More- 
over, the  rule  of  absolute  liability  is  established  in  our 
law  in  the  case  of  fires  caused  by  locomotives  and  has 
been  sanctioned  by  the  United  States  Supreme  Court. 
( 1 65  U.  S.  1 80.  See  St.  Louis  &  S.  F.  R.  R.  Co. 
V.  Mathews,  165  U.  S.  1.)  It  also  underlies  the  rule 
of  respondeat  superior,  since  the  employer  cannot  relieve 
himself  from  liability  for  the  act  done  by  the  servant 
within  the  scope  of  his  employment  by  proof  of  the 
greatest  possible  care  in  the  selection  of  the  servant. 
Logic  and  consistency,  therefore,  demand  that  lia- 
bility, irrespective  of  negligence,  should  not  be  de- 
nounced as  unconstitutional.  The  required  element  of 
causation  may  readily  be  found  in  the  voluntary 
employment  of  dangerous  instruments  or  agencies.** 


[64] 

In  connection  with  the  above  quotation,  the  con- 
struction of  the  federal  employers*  liability  law  of 
1906  (and  in  respect  of  the  points  involved  the  pro- 
visions of  the  act  of  1908  are  the  same)  may  be  con- 
sidered, as  it  was  discussed  in  the  case  of  Howard  v. 
Illinois  C.  R.  Co.  (207  U.  S.  463;  28  Sup.  Ct. 
141).  Justice  White,  delivering  the  opinion  of  the 
Court,  said:  "Besides,  the  statute,  it  is  urged,  dis- 
criminates against  all  who  engage  as  common  carriers 
in  interstate  commerce,  since  it  makes  them  responsi- 
ble, without  limit  as  to  the  amount,  to  one  servant  for 
an  injury  suffered  by  the  acts  of  a  co-servant,  even  in  a 
case  where  the  negligence  of  the  injured  servant  has  con- 
tributed to  the  result,  hence  placing  all  employers  who 
are  common  carriers  in  a  disfavored  and  all  their 
employes  in  a  favored  class.  Indeed,  it  is  insisted  that 
the  statute  proceeds  upon  contradictory  principles, 
since  it  imposes  the  increased  responsibility  just  stated 
upon  the  master  presumably  in  order  to  make  him  more 
careful  in  the  selection  of  his  servants,  and  yet  mini- 
mizes the  necessity  for  care  on  the  part  of  the  servant 
by  allowing  recovery,  although  he  may  have  been  neg- 
ligent. But  without,  even  for  the  sake  of  argument, 
conceding  the  correctness  of  these  suggestions,  we  at 
once  dismiss  them  from  consideration  as  concerning 
merely  the  expediency  of  the  act  and  not  the  power  of 
Congress   to   enact   it." 

And  Justice  Moody  in  discussing  the  substantial 
provisions  of  the  statute  in  his  dissenting  opinion  pointed 
out  that  "the  remedy  afforded  by  it  is  more  general  to 
the  employe  than  that  given  by  the  common  law  in 
several  respects'*;  first,  in  allowing  recovery  of  dam- 
ages for  death  resulting  from  neghgence;  second,  in 
abrogating  the  defense  of  fellow  servants;  third,  in  ex- 
acting a  provision  as  to  comparative  negligence,  by 
virtue  of  which  the  contributory  negligence  of  the 
injured  person  does  not  bar  recovery,  if  the  employer's 
negligence  is  greater,  but  only  serves  to  reduce  the 
amount  of  damages  recoverable ;  and,  fourth,  by  making 
void  all  contracts  relieving  the  employer  from  liability 
for  injuries  received  by  the  employe  in  the  course  of 
employment;  concluding,  "thus  four  doctrines  of  the 
common  law  restrictive  of  the  employe's  rights  are  sup- 
planted by  others  more  favorable  to  him." 


[65] 

Justice  Moody  then  said:  '*There  can  be  no  doubt 
of  the  right  of  a  legislative  body,  having  jurisdiction 
over  the  subject,  to  modify  the  first  three  of  these 
rules  of  the  common  law  in  the  manner  in  which  this 
act  of  Congress  does  it.  They  are  simply  rules  of 
law,  unprotected  by  the  constitution  from  change,  and 
like  all  other  such  rules  must  yield  to  the  superior 
authority  of  a  statute.  They  have  so  generally  been 
modified  by  statute  that  it  may  well  be  doubted  if  they 
exist  in  their  integrity  in  any  jurisdiction.  *  *  * 
Whenever  the  legislative  power  to  change  any  of  these 
rules  of  the  common  law  has  been  drawn  in  question 
in  this  court  it  has  been  sustained.** 

It  may  be  recalled  in  this  connection  that  the  stat- 
ute in  question  has  been  declared  constitutional  in  the 
territories  and  the  District  of  Columbia ;  while  in  respect 
of  the  fourth  point,  relating  to  contracts  of  waiver,  a 
decision  of  the  court  of  appeals  of  the  District  of 
Columbia  held  this  provision  to  be  constitutional.  This 
privision  of  the  law  of  1908  was  referred  to  in  a  very 
recent  case  as  intended  to  prevent  the  evasion  of  the 
other  provisions  of  the  act. 

That  compensation  legislation  prescribes  the  con- 
ditions of  contracts  between  employer  and  employe 
and  changes  largely  the  legal  consequences  and  inci- 
dents of  such  contracts  is  indisputable.  It  seeks  to 
improve  the  status  of  the  employe,  and  in  doing  so 
devolves  upon  the  employer  the  duty  of  administering 
the  benefits  provided,  whether  met  at  his  own  cost  and 
expense  or  made  a  part  of  the  cost  of  production  and 
distributed  among  the  consumers  of  his  goods  or  the 
public  served  by  his  undertaking.  But  even  grant- 
ing that  there  is  as  the  result  of  such  legislation  a  shift- 
ing of  relationships,  it  does  not  follow  that  it  dis- 
criminates unfairly  between  employer  and  employe. 
Thus  a  statute  regulating  the  payment  of  wages  in 
store  orders  was  said  to  have  a  tendency  to  place  the 
employer  and  employe  upon  equal  ground,  suggesting  a 
previously  existing  recognizable  inequality;  in  another 
case  the  Supreme  Court  speaks  of  it  as  an  established 
and  recognized  fact  that,  in  the  making  of  contracts, 
employers  and  employes  do  not  stand  upon  an  equal- 
ity. Such  inequality  is  easily  a  result  of  the  growth 
of  corporations  and  the  centralization  of  business  man- 
agement   employing    numerous    and    widely    scattered 


[66] 

employes,    which    fact    legislatures    may    recognize    in 
providing  remedial  legislation. 

Many  of  the  points  of  statutory  enactment  and  of 
judicial  construction  noted  above,  together  w^ith  other 
legal  considerations,  were  embodied  in  the  brief  pre- 
sented to  the  Atlantic  City  conference  and  in  the 
report  of  the  New  York  commission,  the  latter  express- 
ing its  conclusion  in  the  following  language:  *'It  is  on 
these  judicial  statements  and  the  authorities  which  fol- 
low them  that  we  base  our  contention  as  to  the  power 
of  the  legislature  to  deal  with  the  question  of  employ- 
er's liability  on  a  basis  other  than  fault.  That  the  mat- 
ter is  clear  beyond  peradventure  we  do  not  assert,  but 
that  the  legislature,  on  examining  its  power  to  enact  the 
legislation  we  are  about  to  reconmiend,  vsnll  agree  that 
such  action  is  within  its  constitutional  powers,  we 
confidently  expect.** 

It  seems  from  the  brief  of  Mr.  Harper,  who  has  given  this 
matter  particular  attention  with  reference  to  the  constitutional  pro- 
visions in  Illinois,  that  the  greatest  question  for  consideration  is 
whether  or  not  the  proposed  legislation  creating  Hability  without 
fault  and  arranging  for  automatic  compensation,  could  be  sus- 
tained against  the  objection  that  it  would  deprive  either  the 
employer  or  the  employe  of  the  right  to  trial  by  jury.  In  dis- 
posing of  this  question  we  quote  from  the  brief  of  Mr.  Harper: 

In  suits  at  common  law  where  the  value  in  con- 
troversy shall  exceed  $20,  the  right  of  trial  by  jury 
shall  be  preserved.  Article  II,  of  the  Illinois  consti- 
tution, provides:  **Sec.  5.  TTie  right  of  trial  by  jury 
as  heretofore  enjoyed,  shall  remain  inviolate.'*  "Sec. 
1 3.  Private  property  shall  not  be  taken  or  dam- 
aged for  the  public  use  without  just  compensation.  Such 
compensation,  when  not  made  by  the  state,  shall  be 
ascertained  by  a  jury  as  prescribed  by  law." 

It  will  be  readily  seen  that  were  it  not  for  the 
reservation  of  this  right  of  a  jury  trial,  all  other  objec- 
tions relating  to  due  process  of  law,  etc.,  would  van- 
ish away,  because  the  legislature,  in  providing  a  new 
statutory  remedy  for  an  existing  condition,  might  also 
provide  a  statutory  proceeding,  sufficient  in  itself,  for 
enforcing  the  liabilities  and  securing  the  benefits  of 
such  a   statute.      And   while   the   constitutional   provi- 


[67] 

sions  quoted  supra,  were  not  intended  to  and  did  not 
confer  any  new  right  or  trial  by  jury,  but  merely  pre- 
served the  right  as  it  existed  at  the  time  of  the  adop- 
tion  of  the  constiution  (Whitehurst  vs.  Coleen,  53 
111.  247),  yet  all  actions  for  damages  for  wrongs  to 
person  or  property,  were  triable  by  jury  at  common 
law,  and  were  and  are  within  the  application  of  the 
Constitutional  provisions  above  quoted. 

It  has  been  contended  that  a  compensation  law, 
being  in  the  nature  of  a  new  statutory  remedy,  would 
not  properly  be  subject  to  the  objection  that  it  deprived 
any  person  of  the  right  to  trial  by  jury,  if  such  law 
included  within  its  terms  a  sufficient  and  adequate 
statutory  method  of  enforcing  the  provisions,  either  by 
arbitration  or  a  trial  by  the  court  without  the  inter- 
vention of  a  jury.  As  stated  by  Judge  Brannon: 
"It  (the  fourteenth  amendment)  does  not  prohibit  a 
state  from  future  new  legislation,  action  or  proceedings 
necessary  in  its  judgment  in  the  administration  of  its 
government,  so  long  as  it  bears  alike  on  all  similarly 
circumstanced  and  be  not  unusual,  oppressive  or  arbi- 
trary action  assailing  the  essential  rights  of  the  person." 
Brannon  on  Fourteenth  Amendment,  Page  143,  144. 
(See  also,  as  bearing  indirectly  on  this  proposition: 
Martin  vs.  Pittsburg  etc.  Co.,  203  U.  S.  284.) 

I  am  of  the  opinion,  however,  that  inasmuch  as 
this  right  of  action  for  personal  wrongs  was  a  common 
law  right  and  triable  by  jury  at  the  time  of  adoption 
of  the  constitution  it  is  within  the  application  of  the 
constitutional  provision,  and  that  a  general  compensation 
law  would  as  effectually  take  away  that  constitutional 
right,  as  would  a  direct  statute  expressly  abrogating 
the  right  of  trial  by  jury  in  tort  cases  between  master 
and  servant. 

The  general  terms  **due  process  of  law,**  which 
the  constitution  does  not  even  attempt  to  define,  are 
susceptible  of  a  good  deal  of  extension  and  enlargement 
by  construction,  and  can  be  interpreted  in  such  a  man- 
ner as  to  embrace  all  reasonable  police  regulations  which 
changing  conditions  seem  to  warrant;  but  the  right  of 
"trial  by  jury**  can  mean  but  one  thing,  and  the  con- 
stitutional provision  preserving  it  is  singularly  inelastic, 
and  it  has  practically  the  same  scope  today  that  it  had 
when  the  constitution  was  adopted. 


[68] 

At  the  outset  it  may  be  noted  that  the  right  of 
trial  by  jury  was  not  guaranteed  in  express  terms  by 
Magna  Charta,  but  the  provision  that  no  freeman 
should  be  hurt  in  either  his  person  or  property,  unless 
by  the  lawful  judgment  of  his  peers,  or  by  the  law  of 
the  land,  was  so  construed.     Profatt  Jury  Tr.  Sec.  24. 

Of  course,  after  the  controversy  arises,  the  par- 
ties to  the  suit  may  waive  their  right  to  a  jury  and  sub- 
mit the  question  in  controversy  to  the  decision  of  the 
court,  in  which  case,  the  court  obtains  its  power  to 
try  the  issues  of  fact  wholly  from  the  agreement  of 
the  parties.  Travers  v.  Wormer,  1 3  111.  App.  39. 
Indeed,  our  statute  provides  that  '*in  all  cases  in  any 
court  of  record  in  this  state,  if  both  parties  shall  agree, 
both  matters  of  law  and  fact  may  be  tried  by  the 
court."  Hurd*s  Rev.  Stat.  1908,  Page  1628,  Sec. 
60. 

It  has  been  held  that  the  provisions  of  the  fed- 
eral constitution  apply  only  to  the  federal  courts,  and 
that  the  states  may,  if  they  choose,  provide  for  the  trial 
of  civil  cases  in  the  state  courts  without  the  interven- 
tion of  a  jury,  provided,  of  course^  that  they  shall  not 
transcend  the  express  limitations  which  they  have  placed 
upon  themselves  in  their  respective  state  constitutions. 
Cooley's  Con.  Lim.  6th  Ed.  page  29,  30.  Keith  v. 
Henkleman,  I  73  111.  1  37.  Spies  v.  Illinois,  123  U.  S. 
131.     24Cyc.  103. 

The  right  of  the  jury  trial  in  the  state  court  is  not  a 
privilege  or  immunity  of  national  citizenship  which  the 
fourteenth  amendment  prohibits  the  state  from  abridg- 
ing; it  only  defends  such  privileges  or  immunities  as 
arise  from,  and  are  incident  to,  national  citizenship  as 
such.     Brannon  on  Fourteenth  Amendment,  page  82. 

The  control  of  questions  relating  to  public  health 
was  ordinarily,  before  the  adoption  of  the  constitution, 
vested  in  boards  or  officers  who  were  authorized  to 
proceed  in  a  summary  manner  without  the  intervention 
of  a  jury,  and  such  cases,  therefore,  not  coming  within 
the  application  of  the  constitutional  provision,  do  not 
now  call  for  or  require  a  jury  trial.  24  Cyc.  1 30. 
Metropolitan  Bd.  of  Health  vs.  Heister,  37  N.  Y. 
661. 

We  have  also  seen  that  the  state  and  its  agencies 
may  take  or  injure  the  property  of  a  person  in  times 


[69] 

of  great  necessity  or  danger  in  a  summary  manner 
without  any  due  process  of  law  or  trial  of  any  kind,  and 
without  compensation  to  the  person  injured,  when  the 
general  safety  or  welfare  of  the  people  requires  it. 

The  constitution  of  the  state  of  California  author- 
izes prosecutions  for  felonies  by  information  without 
indictment  by  a  grand  jury  in  the  discretion  of  the 
legislature.  The  penal  code  of  the  state  following  this 
constitutional  authority  makes  provision  for  the  prose- 
cution of  felonies  by  information  and  dispenses  with  the 
indictment  by  a  grand  jury.  In  sustaining  this  legisla- 
tion under  the  California  constitution,  the  Supreme 
Court  of  the  United  States  said: 

**Any  legal  procedure,  enforced  by  public  author- 
ity, whether  sanctioned  by  age  and  custom  or  newly  de- 
vised in  the  discretion  of  the  legislature  in  furtherance  of 
the  general  pubhc  good,  must  be  held  to  be  due  proc- 
ess of  law."  Hurtado  v.  CaHfornia,  110  U.  S.  537. 
See  also  in  re  Debs,   158,  U.  S.  564. 

We  have  also  seen  that  pauper  acts,  imposing  a 
liability  for  the  support  of  indigent  relatives,  when 
there  was  no  common  law  duty  of  support,  are  held  to 
be  legal,  and  not  an  infringement  of  any  constitutional 
rights.  In  addition  to  the  quotation  made  supra  from 
People  V.  Hill,  I  63  111.  1 86,  the  court  said,  with  ref- 
erence to  the  right  of  trial  by  jury: 

**The  legal  liability  imposed  is  statutory,  and  the 
statute  fixes  the  procedure  by  means  of  which  the  liabil- 
ity is  to  be  enforced.  *  *  *  XJ^js  procedure  may 
not  be  in  strict  conformity  with  that  provided  by  the 
English  statute  or  that  provided  in  some  other  states, 
but  it  is  not  necessarily  invalid  on  that  account.  It  is 
a  statutory  liability,  and  there  is  no  reason  why  the 
procedure  for  its  enforcement  cannot  be  provided  for 
in  the  statute  fixing  the  liability.  We  are  unable  to 
see  that  the  method  of  procedure  adopted  violates  any 
constitutional  right  of  appellee.  It  is  suggested  that  it 
deprives  him  of  the  right  of  trial  by  jury.  It  is  only 
the  right  of  trial  by  jury  *as  heretofore  enjoyed'  that 
section  5  of  article  2  of  the  constitution  provides  *shall 
remain  inviolate.*  This  section  was  not  intended  to 
confer  the  right  of  jury  trial  in  any  class  of  cases  where 
it  had  not  previously  existed,  nor  was  it  intended  to 
introduce  it  into  special  summary  jurisdictions  unknown 


[70] 

to  the  common-law  and  which  do  not  provide  for  that 
mode  of  trial.  Ward  v.  Farwell.  97  111.  593; 
Cooley's  Const.  Lim.  (6th  Ed.)  504,  and  authorities 
cited  in  note  2."     People  v.  Hill.  163  111.   186.  192. 

193. 

In  my  judgment,  this  legislation  presents  the  far- 
thest extreme  to  which  the  state  of  Illinois  has  gone  in 
limiting  the  right  of  trial  by  jury,  and  it  finds  its  only 
justification  in  the  statement  by  the  court  that  the  legis- 
lature may,  in  the  exercise  of  the  police  power,  change 
what  is  a  moral  duty  into  a  legal  liability,  thus  lessen- 
ing a  public  burden. 

There  are  a  great  many  other  cases  in  which  the 
right  of  trial  by  jury  has  either  been  limited  or  entirely 
denied,  such  as  confessing  of  a  judgm.ent,  entering 
into  a  recognizance,  giving  a  mortgage,  which,  when 
recorded,  may  be  enforced  by  scire  facias,  the  imposi- 
tion of  taxes  or  assessments,  the  fixing  the  amount  of 
liability  under  a  cost  bond,  cases  in  chancery,  etc.  It 
is  also  the  usual  practice,  in  most  of  the  states,  to 
assess  dam.ages  for  the  taking  of  a  right  of  way,  with- 
out the  intervention  of  a  jury,  and  the  supreme  court  of 
Pennsylvania  has  held  a  law  constitutional  which  pro- 
vided for  assessing  damages  in  the  case  of  property 
destroyed  by  mobs,  by  an  inquest  of  six  men  on  inspec- 
tion out  of  court.  The  decision  is  based  on  the  ground 
that  the  constitutional  guaranty  of  the  right  of  trial  by 
jury  applies  to  the  trial  of  issues  in  court,  and  not  to 
an  assessment  of  damages  out  of  court.  Ross  v.  Irv- 
ing, 14  111.  170,  181.  In  the  matter  of  the  Penn- 
sylvania Hall.  5  Barr.  204. 

In  my  judgment,  there  would  be  nothing  incon- 
sistent with  any  theory  of  natural  justice  in  taking  away 
the  right  of  trial  by  jury,  so  far  as  the  servant  is  con- 
cerned, in  cases  where  the  injury  occurs  through  the 
negligence  of  an  agent  or  employe  of  the  master,  be- 
lieved reasonable  and  in  good  faith  by  the  master  to 
have  been  competent  at  the  time  of  hiring.  In  other 
words,  the  doctrine  of  respondeat  superior  in  cases  of 
tort  by  an  agent  or  servant  of  the  master,  might  be  abro- 
gated and  the  doctrine  of  compulsory  compensation 
substituted  by  legislative  enactment  in  such  cases. 

In  all  cases  where  the  injury  results  from  the 
direct  negligence  or  intentional  act  of  the  master,  the 


[71] 

servant  would  seem  to  have  a  clear  right  to  his  com- 
mon law  remedies  against  him,  including  the  trial  by 
jury.  The  extension  of  the  liability  of  the  master,  how- 
ever, to  cover  the  negligent  acts  of  a  servant  or  agent, 
is  a  comparatively  recent,  judge-made  privilege  given 
to  the  employe,  and  what  has  thus  been  given  him, 
might  in  reason  be  taken  away,  in  the  exercise  of  the 
reasonable  police  power  of  the  state. 

Even  this  opinion,  however,  is  clouded  by  the 
consciousness  that  the  doctrine  of  respondeat  superior, 
and  the  employe's  rights  thereunder  existed  at  the  time 
of  the  adoption  of  the  constitutional  provision,  and 
might  therefore  be  held  to  be  within  its  apphcation. 

THE  COMPENSATION  RATE 

The  matter  of  adjustment  of  the  scale  of  compensation  is 
an  extremely  difficult  one,  and  in  the  opinion  of  your  committee 
is  such  that  no  one  man  will  be  able  to  propose  a  plan  which 
will  be  entirely  equitable  and  just  when  considered  from  the 
standpoints  of  the  various  interests  involved.  All  that  it  is  pos- 
sible to  do  in  that  connection  is  to  present  the  matter  along  general 
lines  and  then  to  suggest  the  scale  of  compensation  which  adheres 
as  nearly  to  general  principles  as  may  be.  On  this  subject,  Mr. 
Randolph  says: 

An  initial  compensation  law  will  probably  select 
certain  industries  whose  hazards  are  widely  advertised 
and  whose  workmen  belong  to  influential  trade  unions. 
As  in  these  industries  will  be  found  many  establish- 
ments representing  large  concentrations  of  capital,  a 
remarkably  liberal  compensation  may  be  advocated. 
But  it  should  be  clearly  understood  that  an  initial  rate 
must  be  fixed,  not  only  in  regard  to  all  the  establish- 
ments affected  but  in  anticipation  of  the  ultimate  exten- 
sion of  the  scheme  to  industries  in  general,  if  not  even 
to  domestic  service,  as  in  Great  Britain.  For  example, 
accidents  to  farm  hands  attract  but  little  attention. 
Few  states,  if  any,  require  them  to  be  reported;  yet 
agriculture  is  wholly,  or  on  its  mechanical  side,  covered 
in  important  foreign  systems.  They  should  not  be  per- 
manently ignored  here.  Indeed,  the  Wisconsin  labor 
bureau  has  already  made  some  inquiry  into  accidents 
of  agriculture  and  reports  for  1907,  293  accidents  to 


[72] 

farm  hands  and  684  to  independent  farmers.  TTiis 
means  that  agricultural  employment  shows  977  casual- 
ties ranking,  in  respect  to  mere  numbers,  next  to  rail- 
way employment  with  1  305. 

If  today  the  railroad  companies  may  be  obliged  to 
compensate  the  brakeman,  tomorrow  the  farmer  may 
have  to  do  the  like  for  his  laborer.  And  the  company 
and  the  farmer  will  have  to  pay  on  the  same  basis,  for 
one  of  the  fixed  points  of  compensation  schemes  is  that 
they  shall  operate  equally  and  uniformly  in  respect  to 
all  workmen  included,  and  not  unequally  and  discrim- 
inately  according  to  the  occupation  or  financial  position 
of  the  employer.  The  history  of  pension  legislation 
teaches  that  if  there  be  any  alteration  in  the  original 
rate,  we  should  expect  an  increase  rather  than  a  reduc- 
tion, so  on  all  accounts  we  are  well  advised  that  an 
initial  rate  should,  as  a  matter  of  policy,  be  moderate. 
But  a  moderate  rate  is  not  only  commended  by  policy. 
It  is  dictated  by  the  law  of  the  constitution  which  for- 
bids spoliation  under  forms  of  law.  If  the  master  can 
be  made  responsible  for  injuries  beyond  his  fault,  his 
burden  must  be,  at  least,  reasonable  and  not  exorbi- 
tant. 

Now  we  have  shown  that  the  compensation  rate 
must  be  uniform  for  all  workmen  in  order  to  insure  to 
everyone  the  equal  protection  of  the  laws.  TTiis  qual- 
ity of  benefit  for  workmen  involves  an  inequality  of  bur- 
den for  employers,  who,  rich  and  poor  alike,  must  pay 
the  same  proportional  rate.  And  an  unequal  inci- 
dence of  burden  may  occur  in  other  ways.  A,  em- 
ploying 50  workmen  in  a  dangerous  trade,  is  subject 
to  a  far  heavier  risk  at  $2,000  death  compensation 
than  B,  who  employs  1 ,000  in  a  safe  one,  would  incur 
at  $4,000.  C,  with  a  dozen  plants,  might  weather  a 
catastrophe  whose  resulting  liabilities  would  bankrupt 
B,  were  his  single  plant  destroyed. 

While  I  do  not  assert  that  the  unavoidable  in- 
equality of  burden  would  necessarily  amount  to  a  denial 
of  "equal  protection**  and  thus  block  any  compre- 
hensive scheme,  I  do  insist  that  a  compensation  figure 
based  upon  the  ability  of  well-to-do  employers  or  of 
great  industries  would  work  an  unlawful  discrimina- 
tion against  their  weaker  associates.  All  employers 
would  not  be  "treated  alike  under  substantially  similar 
conditions.** 


[73] 

The  moderate  rate  may  be  broadly  described 
as  one  which  each  or  every  industry  or  employer  within 
the  actual  or  the  potential  purview  of  a  compensation 
scheme  may  be  lawfully  required  to  bear;  a  rate  im- 
posed on  the  railroad  company  today  must  be  one 
which  can  later  be  laid  upon  the  small  manufacturer. 

Each  commission  which  has  made  a  study  of  this  question 
has  made  an  effort  to  solve  the  question  of  rate.     What  seems 
to  be  the  general  conclusion  along  this  line  may  be  gathered  from 
the  following:     November   1910  a  conference  of  commissioners 
on  compensation  for  industrial   accidents  was  held  at  Chicago. 
This  conference  met  in  response  to  a  call  of  the  Massachusetts 
commissioners  who  desired  the  opinion  of  the  commissions  of  the 
various  states  as  to  certain  specific  questions  under  consideration  by 
the  Massachusetts  commission  in  preparing  a  bill  for  the  January 
1911    meeting   of   the   state   legislature.      Commissions   of   eight 
states,  Illinois,  Massachusetts,  Minnesota,  Montana,  New  Jersey, 
New  York,  Ohio  and  Wisconsin  were  represented  and  Coimecti- 
cut  was  represented  by  a  special  delegate.     The  United  States 
employers*  liability  commission    and  the    United    States    bureau 
of  labor  were  represented,  and  there  was  present  a  special  com- 
mittee of  commissioners  on  uniform  state  laws  charged  with  the 
preparation  of  uniform  workmen's  compensation  law.     The  con- 
ference comprised  large  employers,  small  employers,  representa- 
tives of  labor,  legislators  and  special  students  on  workmen's  com- 
pensation legislation.      Certain  questions  relative  to  the  features 
of  the  compensation  law  proposed  by  the  Massachusetts  commis- 
sion were  proposed   to  the   conference   on  the  question  of   rate 
and  duration  of  compensation.     The  questions  and  answers  were 

as  follows: 

4.  Shall  compensation  be  paid  in  a  lump  sum 
or  in  installments: 

(a.)      Temporary  disability?      Installments. 

(b.)  Permanent  disability  or  death?  Install- 
ments with  right  to  commute  after  given  time  with  ap- 
proval of  some  public  official. 

5.  Amount  and  duration  of  compensation? 

(a.)  Temporary  disability?  Fifty  per  cent  of 
the  impairment  of  wages;  maximum  of  $10  per  week. 


[74] 

minimum  of  $5  per  week;  or  if  wages  less  than  $5,  then 
full  wages  (or  66  2-3%  of  wages  up  to  $7.50  of 
wages  per  week,  then  50  per  cent  of  balance  until 
compensation  amounts  to  the  maximum  of  $10  per 
week,  maximum).  Payments  not  to  extend  beyond 
period  of  300  weeks. 

(b.)  Permanent  disability?  Same  as  tem- 
porary disability. 

(c)  Partial  permanent  disability?  Fifty  per 
cent  of  impairment  of  wages;  maximum  of  $10  per 
week;  payments  not  to  extend  beyond  period  of  300 
weeks. 

(d)  Death? 

(1)  Total  dependents? 

If  orphans,  50  per  cent  of  wages  of  deceased. 

If  widow  alone,  25  per  cent  of  wages. 

If  widow  and  one  child,  40  per  cent  of  wages. 

If  widow  and  two  children,  45  per  cent  of  wages. 

If  widow  and  three  children,  50  per  cent  of 
wages. 

If  widow  and  four  children,  55  per  cent  of 
wages. 

If  widow  and  five  children  or  more,  60  per  cent 
of  wages. 

If  widow,  father  or  mother,  50  per  cent  of  wages. 

Children  under  16  years  of  age  only  to  be 
included  and  only  during  period  they  are  under  1 6 
years  of  age. 

Maximum  of  $10  per  week,  minimum  of  $5  per 
week,  or  if  full  wages  less  than  $5  their  full  wages 
(or  66  2-3%  of  wages  up  to  $7.50  of  wages  per 
week,  then  50  per  cent  of  balance  until  compensation 
amounts  to  $10  per  week,  maximum).  Payments  not 
to  extend  beyond  period  of  300  weeks. 

2.  Partial  dependents?  Fifty  per  cent  of  the 
portion  of  the  wages  contributed  by  the  deceased  to 
the  partial  dependents. 

(2)  No  dependents?  Expenses  of  last  sick- 
ness and  burial,  not  exceeding  $200. 

6.  Length  of  waiting  period?  Two  weeks, 
during   which   period   employer   shall   furnish   medical 


[75] 

treatment  or  hospital  care  to  an  amount  not  exceed- 
ing $  1 00  in  value. 

Whether  any  proposed  plan  of  compensation  for  all  indus- 
trial accidents  would  not  be  an  excessive  burden  upon  the  indus- 
tries, is  a  question  that  can  only  be  answered  after  an  exhaustive 
study  of  the  statistics  with  reference  to  accidents  and  the  rela- 
tion which  compensation  for  those  accidents  under  the  proposed 
plan  would  have  to  the  employer's  business.  This  as  far  as  the 
employer  is  concerned  is  the  manner  in  which  the  question  of 
rate  of  compensation  must  necessarily  be  finally  determined  in  the 
opinion  of  your  committee. 

In  considering  the  sufficiency  of  the  rate  of  compensation 
from  the  standpoint  of  the  employe,  regard  should  be  had  to 
what  is  now  paid  on  the  average  to  employes  meeting  with 
injuries  in  industrial  accidents.  The  New  York  commission  made 
an  extended  investigation  into  this  branch  of  the  subject,  and  a 
brief  summary  of  their  findings  is  set  forth  in  Bulletin  90  of 
Bureau  of  Labor,  page  693.  In  connection  with  the  objection 
that  a  small  proportion  of  the  workmen  injured  by  accidents  of 
employment  get  substantial  compensation,  the  commission  inves- 
tigated 181  cases  in  which  married  men  lost  their  lives  in  indus- 
trial accidents  in  1907  and  1908  in  Erie  county,  in  the  Borough 
of  Manhattan.  Of  this  number  it  was  found  that  the  families 
received  nothing  in  5  6  cases ;  that  they  received  $  1 00  or  less  in 
12  cases;  from  $101  to  $500  in  52  cases,  from  $501  to  $2000 
in  19  cases,  more  than  $2000  in  12  cases,  while  suits  were 
pending  in  30  cases,  so  that  in  79  per  cent  of  the  closed  cases 
the  families  received  $500  or  less,  and  in  only  7.9  per  cent  of 
such  cases  did  they  receive  more  than  $2000,  or  an  amount  equal 
to  three  times  the  average  yearly  earnings  of  the  workmen  con- 
sidered. An  investigation  of  1040  work  accidents  by  the  state 
labor  department,  in  which  total  losses  and  payments  were  ascer- 
tained, showed  that  in  404  of  the  902  cases  of  temporary  dis- 
abihty  (lasting  from  one  week  to  more  than  one  year)  nothing 
was  received  by  the  injured  person,  not  even  medical  expenses; 
while  in  304  cases  the  amount  recovered  from  the  employer  was 
less  than  one-half  the  loss  of  wages  and  expenses  of  the  injury. 


[76] 

In  71  cases  there  was  permanent  partial  disability,  reducing  the 
earning  capacity  of  the  employe  in  varying  amounts.  Of  this 
number  18  received  nothing,  22  received  $100  or  less,  14  re- 
ceived from  $101  to  $500.  5  received  from  $501  to  $2000. 
while  one  person  received  more  than  $2000;  suits  were  still 
pending  in  1  1  cases.  In  902  cases  of  temporary  disabiHty  there 
was  a  wage  loss  of  $66,800,  besides  medical  expenses  amount- 
ing to  $20,000.  while  all  payments  by  employers  amounted  to 
but  $25,339,  or  less  than  30  per  cent  of  the  losses  and  costs. 
Payments  in  cases  of  permanent  partial  disability  made  a  some- 
what better  showing,  approximating  34  per  cent  of  the  actual 
losses,  though  this  omits  from  consideration  the  depreciated  earn- 
ing power;  while  in  10  cases  of  permanent  total  disability,  com- 
puted on  a  basis  of  three  years*  wage  loss,  the  payments  by 
employers  amounted  to  but  9.7  per  cent  of  the  losses  and  costs. 
Data  obtained  from  other  sources  indicate  the  same  general  con- 
dition of  inadequate  compensation  for  losses  suffered. 

That  the  system  of  liability  and  damage  suits  entails  waste 
is  shown  by  the  fact  that  the  expenditures  of  327  firms  in  the 
state  in  1907.  employing  125,995  men,  amounted  to  $192,538 
on  account  of  accidents,  accident  insurance,  legal  expenses,  etc., 
of  which  the  amount  paid  to  the  persons  injured  was  but  $104,- 
643,  or  54  per  cent  of  the  employers*  outgo  in  this  connection. 
Premium  receipts  and  payment  of  losses  by  nine  insurance  com- 
panies that  keep  separate  accounts  of  their  employers*  liability 
business  show  that  during  1906,  1907  and  1908  they  took  in  as 
premiums  $23,523,585  and  paid  out  in  insurance  $8,559,795, 
or  but  36  per  cent  of  the  premiums  received.  In  connection  with 
attorneys'  fees,  which  are  frequently  contingent  on  recoveries,  it 
was  shown  that  in  1 4  of  the  5 1  cases  investigated  the  fee  was  less 
than  25  per  cent  of  the  recovery,  in  14  cases  it  was  50  per  cent 
or  more,  while  in  the  remaining  23  cases  it  was  more  than  25 
per  cent  and  less  than  50  per  cent. 

The  question  of  the  cost  to  the  employer  of  a  compensation 
system  as  compared  with  the  cost  of  the  present  system  received 
consideration,  the  investigation  of  this  phase  of  the  question  being 
conducted  by  the  state  bureau  of  labor  statistics.      Data  were 


[77] 

secured  from  52  firms,  employing  about  29,000  persons,  from 
which  a  comparative  study  was  made,  showing  the  actual  cost  of 
accidents  during  the  year  1907,  and  the  cost  under  a  compensa- 
tion scheme  which  allowed  three  years*  earnings  in  case  of  death 
and  half  earnings  during  disability,  making  up  the  loss  of  wages 
where  partial  disability  reduced  the  earning  capacity.  From  the 
results  of  this  investigation  the  report  concludes  that  "even  with 
the  most  liberal  allowances  for  possible  understatement  on  the 
cost  of  compensation  side,  it  is  impossible  to  interpret  the  figures 
as  affording  anything  but  very  strong  evidence  that  large  manu- 
facturing concerns  could  pay  compensation  on  such  a  scale  as 
that  here  used,  which  is  fully  equal  to  the  present  English  system, 
at  no  greater  cost  than  many  of  them  are  now  actually  incurring 
for  accidents,  and  probably  in  some  cases  for  less."  It  is  assumed 
that  this  conclusion  should  not  be  made  to  apply  to  small  em- 
ployers. 

CONTRIBUTION  TO  FUND  BY  EMPLOYES 

While  there  are  the  strongest  reasons  in  favor  of  the  con- 
tribution on  the  part  of  the  employe  to  the  fund  out  of  which  the 
workingmen's  compensation  is  to  be  paid,  a  recent  research  by 
legislative  commissions  or  other  parties  has  disclosed  no  way  in 
which  this  may  be  brought  about  by  legislative  enactment.  It  is 
recognized  that  such  a  scheme  would  be  advisable  for  the  reasons 
that  it  would  remove  from  such  schemes  all  idea  of  charity  and 
would  put  the  employe  on  a  basis  of  independence  with  reference 
to  workingmen's  compensation.  Such  scheme  would  also  be  con- 
ducive to  the  exercise  of  care  on  the  part  of  servants  knowing 
that  while  the  injured  person  would  be  compensated  under  the 
system,  part  at  any  rate  of  the  cost  of  the  accident  would  fall  on 
the  employe  generally.  It  is  further  believed  that  it  would  reduce 
the  element  of  fraudulent  claims  and  simulation  of  injurious  effects 
and  malingering  for  the  reason  that  honest  and  conscientious 
employes  having  a  personal  interest  in  the  fund  by  reason  of  their 
contribution  thereto,  would  be  on  the  look-out  for  such  cases  of 
fraud  and  malingering.  It  is  true  that  this  principle  is  enacted 
into  the  Montana  law  above  mentioned,  but  it  is  the  opinion  of 
those  who  have  given  consideration  to  the  subject  that  the  pro- 


[78J 

visions  of  the  Montana  law  will  not  stand  the  constitutional  tests 
and  that  when  the  question  is  brought  before  the  supreme  court  of 
that  state  the  act  will  be  held  unconstitutional. 

On  the  question  of  contribution  by  the  employe,  Mr.  Ran- 
dolph in  his  brief  herein  referred  to  in  answering  the  question, 
"May  an  American  legislature  follow  the  example  of  Germany 
and  Austria,  and  oblige  a  workman  to  devote  a  fraction  of  his 
earnings  to  an  accident  fund?"  says: 

Observe  that  there  is  no  question  here  of  forced 
contributions  to  present  needs  as  where  a  capable  head 
of  a  family  is  ordered  to  pay  for  their  maintenance.  The 
immediate  question  is  whether  the  state  may  prescribe 
thrift  in  contemplation  of  a  possible  disablement;  and 
this  is  a  branch  of  the  broader  question  as  to  its  pre- 
scription in  view  of  the  relatively  probable  incapacities 
from  sickness  and  old  age.  But  even  if  the  state  may 
prescribe  for  all  men  a  measure  of  the  latter  sort,  it  does 
not  follow  that  it  may  compel  a  "workman"  to  contrib- 
ute to  an  accident  fund,  which  is  created  for  a  "class" 
as  distinguished  from  the  community  at  large.  The 
solidarity  of  "labor"  is  being  strenuously  advocated;  it 
is  being  realized  in  some  degree,  but  it  is  not  yet  assimi- 
lated in  our  jurisprudence  to  the  solidarity  of  the  fam- 
ily, on  the  one  hand,  or  to  that  of  the  community  on 
the  other.  However,  if  it  shall  be  held  that  a  legislature 
can  so  reverse  our  traditional  conceptions  of  legal  re- 
sponsibility as  to  compel  the  master  to  compensate  for 
all  accidents,  regardless  of  their  cause,  this  relatively 
m.inor  matter  of  workmen's  contribution  may  well  take 
the  came  course. 

If  workmen  cannot  be  affected  with  direct  contribu- 
tions to  compensation  it  may  happen  that  indirect  con- 
tributions will  be  obtained  by  employers  by  shaving  the 
wage  scale,  in  case  the  compensation  rate  is  so  high  as 
to  necessitate  searching  economies  in  cost  of  produc- 
tion. 

While  it  may  be  true  that  our  courts  will  come  in  time  to 
relax  their  views  on  this  branch  of  the  subject,  in  the  present 
state  of  the  law,  it  would  be  fatal,  in  the  opinion  of  your  com-  * 
mittee,  to  any  such  law  to  incorporate  that  element  as  a  com- 
pulsory feature,  and  so  in  any  bill  that  is  framed,  if  the  idea  of 
contribution  by  the  employe  is  to  be  incorporated  at  all  it  must 


[79] 

be  done  in  such  a  way  that  it  is  accomplished  by  the  consent  of 
the  employe.  In  other  words,  it  must  be  left  as  a  matter  of  con- 
tract between  the  employer  and  the  employe. 

CLASSIFICATION  OF  INDUSTRIES 

Since  it  appears  that  any  remedial  legislation  of  the  kind 
under  consideration  must  look  for  its  support  to  the  police  power 
of  the  state,  the  question  of  the  classification  of  industries  is  one 
for  grave  consideration.  No  doubt  very  much  of  the  legal  dif- 
ficulty would  be  removed  if  the  law  were  made  universal  in  its 
application;  at  the  same  time  a  mandatory  statute  made  appli- 
cable to  all  employers  of  labor  might  be  held  unreasonable  by 
the  courts  for  manifestly  a  large  number  of  the  small  industries 
of  the  state  involve  no  particular  hazard  to  the  employe,  and  it  is 
a  fundamental  principle  that  any  exercise  of  the  poHce  power  of 
the  state  must  be  reasonable  in  view  of  the  conditions  which  the 
legislature  affects. 

Under  the  law  adopted  by  the  state  of  New  York  the  legis- 
lature relying  for  its  authority  in  passing  the  workingmen's  com- 
pensation act  on  the  police  power,  has  endeavored  to  select  cer- 
tain industries  declared  by  the  act  to  be  hazardous  and  conse- 
quently a  proper  subject  for  such  legislation.  Mere  declara- 
tions by  a  legislature  that  certain  industries  are  hazardous  does 
not  make  them  so  as  a  matter  of  law,  and  it  still  remains  for  the 
court  to  determine  whether  such  classification  made  on  the  basis 
of  the  hazard  of  the  trade  is  a  reasonable  one. 

It  may  be  interesting  to  note  that  the  supreme  court  of  New 
York,  which  is  one  of  the  inferior  courts  in  that  state,  has  had 
occasion  to  pass  upon  the  constitutionality  of  a  new  workingmen's 
compensation  law  of  that  state.  This  was  in  the  suit  of  Ives  v. 
The  South  Buffalo  Railway  Company,  in  the  supreme  court  of 
Erie  county.     The  decision  in  this  case  is  as  follows: 

Pound,  J.  The  answer  challenges  the  consti- 
tutionality of  chapter  674,  Laws  1910,  entitled  **An 
act  to  amend  the  labor  law  in  relation  to  workmen's 
compensation  in  certain  dangerous  employments.**  This 
chapter  applies  only  to  workmen  engaged  in  manual  or 


[80] 

mechanical  labor  in  certain  employments  declared  by 
the  act  to  be  dangerous  by  reason  of  inherent,  neces- 
sary or  substantially  unavoidable  risks  to  life  or  limb, 
in  which  it  is  deemed  necessary  to  establish  a  new  sys- 
tem of  compensation  for  accidents  to  workmen  (Sec. 
215).  Among  such  employments  is  included:  "6. 
The  operation  on  steam  railroads  or  locomotives,  en- 
gines, trains,  motors  or  cars  propelled  by  gravity  or 
steam,  electricity  or  other  mechanical  power,  or  the 
construction  or  repair  of  steam  railroad  tracks  and 
roadbeds  over  which  such  locomotives,  engines,  trains, 
motors  or  cars  are  operated"  (Sec.  215).  Plain- 
tiff brings  himself  squarely  under  the  provisions  of  this 
act  by  alleging  facts  that  establish,  as  admitted  by  the 
answer,  that,  while  employed  by  defendant  as  a  switch- 
man, he  was  injured  in  the  prosecution  of  his  work, 
without  negligence  on  the  part  of  the  defendant,  and 
"without  serious  or  willful  misconduct"  on  his  part, 
but  solely  by  reason  of  a  necessary  risk  or  danger  of 
his  employment,  or  one  inherent  in  the  nature  thereof. 
(Sec.  217). 

Prior  to  the  enactment  of  the  statute  above  cited 
he  would  have  been  without  remedy.     By  virtue  of  its 
provisions    he    is    entitled    to    recover    according    to    a 
fixed  scale   of  compensation  without  establishing   that 
the  employer  is  at  fault  in  any  way    (Sec.   219  a). 
The  plaintiff  demurs  to  the  answer  on  the  ground  that 
it  is  insufficient  in  law  on  its  face.     This  act  is  based 
on  the  workmen's  compensation  act  of  England,  and 
its  enactment  is  due  to  the  fact  that  the  common  law 
affords  no  available  remedy  for  injuries  occasioned  by 
industrial  accidents  not  attributable  to  the   negligence 
of  the  employer.     Defendant  maintains  that,  under  our 
system  of  constitutional  government,  the  incorporation 
into  our  law  of  the  English  law  of  workmen's  compen- 
sation is  beyond  the  powers  of  the  legislature:     First, 
because  the  act  in  question  deprives  the  defendant  of 
hberty  and  property  without  due  process  of  law,  and 
denies  it  the  equal  protection  of  the  laws  in  contraven- 
Constitution,  and  article    I,  section    6,    of    the    consti- 
constitution,    and   article    1 ,    section   6,   of   the   consti- 
tution of  this  state;  second,  because  it  violates  the  right 
of  trial  by  jury  guaranteed  by  article  1 ,  section  2,  of 
the  constitution  of  this  state;  third,  because  it  limits  the 
amount  recoverable  in  actions  to  recover  damages  for 


[81] 

injuries  resulting  in  death  in  contravention  of  article  1, 
section  1  8,  of  the  constitution  of  this  state. 

It  has  well  been  said  by  Mr.  Justice  Brown  of 
the  Supreme  Court  of  the  United  States,  writing  the 
opinion  of  the  court  in  Holden  v.  Hardy  ( 1 69  U.  S., 
366,  at  p.  387),  that  "while  the  cardinal  principles 
of  justice  are  immutable,  the  methods  by  which  jus- 
tice is  administered  are  subject  to  constant  fluctuation, 
and  the  Constitution  of  the  United  States,  which  is  nec- 
essarily and  to  a  large  extent  inflexible  and  exceedingly 
difficult  of  amendment,  should  not  be  so  construed  as 
to  deprive  the  states  of  the  power  to  so  amend  their 
laws  as  to  make  them  conform  to  the  wishes  of  the 
citizens  as  they  may  deem  best  for  the  public  welfare 
without  bringing  them  into  conflict  with  the  supreme  law 
of  the  land.*' 

It  is  well  established  that  statutes  applicable  solely 
to  railroads  do  not  deny  the  railroads  the  equal  pro- 
tection of  the  laws.  A  classification  of  "dangerous 
employments*'  for  the  purpose  of  the  act  must  be  up- 
held.    Missouri  Ry.  v.  Mackay,  127  U.  S.  205. 

But  the  act  is  attacked  chiefly  because  it  imposes 
liability  without  fault.  Our  jurisprudence  offers  ex- 
amples of  legal  liability  wdthout  fault,  and  the  depri- 
vation of  property  without  fault  being  attributable  to 
its  owner.  The  law  of  deodands  was  such  an  example. 
The  personification  of  the  ship  in  marine  law  is  an- 
other. Other  examples  are  offered  in  the  common  law 
liability  of  the  husband  for  the  torts  of  the  wife,  or 
liability  of  the  master  for  the  acts  of  his  servants.  The 
Osceola,  189  U.  S.  158;  Chicago,  R.  I.  &  P.  Ry.  v. 
Zernecke,   183  U.  S.  582. 

In  the  case  last  cited  a  statute  making  railroad 
companies  liable  for  all  damages  inflicted  upon  the 
person  of  passengers  while  being  transported  over  its 
road,  except  in  cases  where  the  injury  arose  through  the 
criminal  negligence  of  the  person  injured,  was  upheld 
primarily  on  the  ground  that  the  railroad  company  being 
a  domestic  corporation  of  Nebraska  accepted  wath  its 
incorporation  the  liability  so  imposed  by  the  laws  of 
the  state  and  could  not  complain  of  it.  But  the  court, 
in  its  opinion,  cites  with  approval  the  opinion  of  the 
supreme  court  of  Nebraska;  "The  legislation  is  justi- 
fiable under  the  police  power  of  the  state,  so  it  has 
been  held.      It  was  enacted   to  make   railroad  com- 


[82J 

panics  insurers  of  the  safe  transportation  of  their  pas- 
sengers as  they  were  of  baggage  and  freight;  and  no 
good  reason  is  suggested  why  a  railroad  company  should 
be  released  from  liability  for  injuries  received  by  a  pas- 
senger while  being  transported  over  its  line  while  the 
corporation  must  respond  for  any  damages  to  his  bag- 
gage or  freight.'* 

The  legislature  may  alter  or  repeal  the  common 
law.  It  may  create  new  offences,  enlarge  the  scope 
of  civil  remedies,  and  fasten  responsibihty  for  injuries 
upon  persons  against  whom  the  common  law  gives  no 
remedy.     Bertholf  v.  O'Reilly,  74  N.  Y.  504. 

It  would  seem  to  follow  that  it  might  make  those 
who  employ  workmen  in  dangerous  callings  insurers  to 
some  extent  of  the  safety  of  such  workmen.  The  com- 
mon law  imposed  upon  the  employe  entire  responsi- 
bility for  injuries  arising  out  of  the  necessary  risks  or 
dangers  of  the  employment.  The  statute  before  us 
merely  shifts  such  liability  upon  the  employer.  That 
the  legislature  has  the  power  to  deal  with  the  ques- 
tion of  employers'  liability  on  a  basis  other  than  fault 
is  not  clear  beyond  peradventure,  but  every  presump- 
tion is  in  favor  of  the  constitutionality  of  the  act,  nor 
do  I  find  its  constitutionality  so  doubtful  as  to  warrant 
this  court  in  holding  that  such  action  is  not  within  the 
constitutional  powers  of  the  legislature. 

I  have  examined  the  authorities  cited  by  the 
learned  counsel  for  the  defendant.  They  merely  point 
out  the  shifting  character  of  the  border  line  between 
statutes  which  are  upheld  by  the  court  as  being  a  legit- 
imate exercise  of  the  legislative  power  to  pass  all 
manner  of  necessary  and  wholesome  acts  for  the  pro- 
tection and  well-being  of  the  public,  although  such  acts 
may  interfere  with  personal  liberty  and  the  right  to  do 
what  one  will  with  his  own,  and  statutes  which  are 
held  by  the  courts  to  interfere  without  warrant  with  the 
privilege  of  pursuing  an  ordinary  trade  or  calling,  and 
therefore  to  be  unconstitutional  and  void. 

In  the  case  of  Lochner  v.  New  York  (189  U. 
S.  45)  the  prevailing  and  dissenting  opinions  contain 
a  full  discussion  of  the  principles  underlying  the  deci- 
sion of  such  cases.  The  court  held  in  that  case  that 
there  is  no  reasonable  ground  on  the  score  of  health  for 
interfering  wnth  the  liberty  of  the  person  or  the  right 
of  free  contract  by  determining  hours  of  labor  in  the 


[83] 

occupation  of  a  baker.  The  same  court  had  already 
held  in  Holden  v.  Hardy  (supra)  that  there  was  rea- 
sonable ground  on  the  score  of  health  for  interfering 
with  the  liberty  of  the  person  and  the  right  of  free  con- 
tract in  determining  hours  of  labor  in  the  occupation 
of  workingmen  in  smelters.  In  the  former  case  the 
public  good  did  not,  in  the  judgment  of  the  court,  re- 
quire the  restrictive  legislation;  in  the  latter  case  it  did. 
In  the  latter  case  Mr.  Justice  Brown  says  that,  **This 
court  has  not  failed  to  recognize  the  fact  that  the  law 
is  to  some  extent  a  progressive  science.  *  *  *  * 
Classes  of  persons,  particularly  those  engaged  in  dan- 
gerous or  unhealthful  employments,  have  been  found 
to  be  in  need  of  additional  protection.'* 

As  to  the  objection  to  the  statute  that  it  limits  the 
amount  recoverable  in  death  cases,  it  is  enough  to  say 
that  it  is  for  the  plaintiff  to  make  the  claim  of  uncon- 
stitutionality in  this  regard,  as  it  is  the  plaintiff  alone 
who  is  prejudiced  thereby,  and  it  does  not  lie  in  the 
mouth  of  the  defendant  to  raise  this  objection  to  the 
statute. 

Demurrer  overruled,  with  costs  and  judgment 
absolute  for  the  plaintiff  directed  on  the  pleadings, 
with  costs. 

It  seems  that  the  idea  of  specific  classification  of  industries 
as  adopted  in  the  New  York  act  has  successfully  withstood  the 
first  attack  upon  it,  and  it  remains  to  be  seen  what  the  court 
of  last  resort  in  New  York  will  do  with  the  question. 

The  Minnesota  idea  as  expressed  in  a  tentative  bill  recom- 
mended by  the  majority  of  the  commission  of  that  state,  is  to  make 
the  selection  of  the  hazardous  occupation  automatic;  that  is,  it  de- 
clares whenever  an  accident  occurs  in  any  occupation  that  then  in 
that  case  the  statute  would  apply.  It  hardly  appears  how  this  sort 
of  classification  can  be  supported  by  reason,  because  under  such 
a  classification  any  occupation,  no  matter  how  inherently 
free  from  hazard  it  might  by  its  nature  be,  in  case  of  an  acci- 
dent happening  to  an  employe  in  that  occupation,  it  would  for- 
ever afterwards  be  a  hazardous  occupation.  For  instance,  apply- 
ing that  law,  should  a  school  teacher  in  passing  through  the  build- 
ing trip  and  fall,  injuring  himself,  forever  afterwards  under  that 
law,  school  teaching  would  be  a  hazardous  occupation.     Advo- 


[84] 

cates  of  this  theory  insist,  however,  that  the  language  would  not 
be  susceptible  of  so  broad  a  construction  as  we  have  indicated, 
for  the  reason  that  they  insist  that  a  qualification  that  the  accident 
must  happen  *'in  the  course  of  employment"  would  eliminate  such 
casual  accidents  as  might  occur  in  an  occupation  and  as  do  not 
constitute  a  hazard  of  that  business,  so  that  the  act  would  not  be 
applicable  where  the  injury  was  one  which  might  as  well  occur 
to  a  person  outside  of  the  occupation  as  to  one  engaged  in  it. 

A  workingmen's  compensation  law  applicable  to  all  employ- 
ers of  labor  might  also  be  too  great  a  burden  upon  the  vast 
number  of  small  industries  in  the  state.  It  has  been  suggested 
that  a  law  might  be  framed  which  limited  its  application  to 
employers  of  labor  who  employ  more  than  a  given  number  of 
employes  at  any  one  time.  Reliance  is  had  for  such  a  classifi- 
cation upon  the  decision  of  the  supreme  court  of  Illinois,  uphold- 
ing that  sort  of  classification  with  reference  to  the  application  of 
the  law  of  Illinois  with  reference  to  mine  inspections.  That  law 
was  limited  in  its  application  to  mines  employing  five  or  more 
men  at  any  one  time.  The  case  is  that  of  St.  Louis  Consolidated 
Coal  Company  v.  Illinois,  1 86  111.  1 34,  which  was  afterwards 
appealed  to  the  Supreme  Court  of  the  United  States  on  the  con- 
stitutional question  involved.  The  decision  is  found  in  185 
U.  S.  203. 

While  in  that  particular  case  the  supreme  court  of  Illinois, 
and  also  the  Supreme  Court  of  the  United  States,  has  held  such 
classification  is  reasonable  and  within  the  authority  of  the  legis- 
lature under  the  police  power,  the  peculiar  business  of  mining  is 
such  perhaps  as  to  warrant  the  legislation  in  that  particular 
industry. 

It  seems  to  your  committee  that,  unless  the  danger  and  lia- 
bility of  injury  increases  with  the  number  of  men  employed  in  an 
industry,  such  classification  could  not  be  held  to  be  reasonable, 
and  arbitrary  and  needless.  The  statistics  with  reference  to  man- 
ufacture show  that  the  ratio  of  injuries  in  the  industries  generally, 
does  not  increase  proportionately  with  the  increased  number  of 
men  employed,  but  that  the  contrary  is  in  fact  the  case.  The  pro- 
portion of  injuries  in  small  industries  is  really  greater  than  in  the 


[85] 

large  industries  employing  great  numbers  of  men.  If  this  is  true, 
we  are  unable  to  see  how  a  limitation  in  the  workingmen's  com- 
pensation act  to  apply  only  to  those  industries  employing  more 
than  a  specified  number  of  men  could  be  held  to  be  reasonable 
and  needful  legislation  with  regard  to  the  industries  covered  within 
the  meaning  of  the  police  power. 

The  attorney  for  the  Illinois  commission  has  recommended 
that  there  be  no  classification  of  industries  but  that  all  be  covered 
excepting  that  the  operation  of  the  law  be  limited  to  those  indus- 
tries employing  more  than  a  specified  number  of  men. 

It  will  be  seen  from  this  brief  discussion  of  the  subject  that 
under  the  law  as  it  exists,  no  matter  from  what  position  the  subject 
is  approached,  serious  obstacles  seem  to  be  in  the  way.  Your 
committee  is  of  the  opinion  that  the  question  will  have  to  be 
determined  by  the  courts  finally. 

THE  REMEDY 

In  view  of  what  is  desired  to  be  accomplished  and  the  pecu- 
liar constitutional  restrictions  and  limitations  obtaining  in  the 
various  states,  what  legislative  action,  if  any,  is  advisable? 

It  seems  to  be  the  conclusion  that  any  safe  legislation, 
although  perhaps  compulsory  in  form,  must  be  elective  in  fact 
and  should  embrace  all  industries,  although  it  might  be  that  a 
limitation  of  the  application  of  the  act  to  industries  employing 
more  than  a  specified  number  of  men  would  meet  with  judicial 
approval. 

A  bill,  "compulsory  in  form,  but  elective  in  fact**  would 
mean  a  bill  providing  for  the  payment  of  compensation  for  all 
industrial  accidents  upon  the  basis  of  the  scale  to  be  included  in 
the  act,  such  bill,  however,  to  reserve  to  both  employer  and 
employe  their  rights  at  common  law,  but  providing  as  to  the 
employer  that,  if  he  pursues  his  common  law  remedies  and  refuses 
to  make  settlement  of  compensation  under  the  act,  his  common 
law  defences  shall  be  limited  (the  limitation  to  be  fixed  by  the 
act)  and  with  the  further  proviso  as  to  the  employe  that  he  shall 
be  presumed  to  have  accepted  the  compensation  plan  unless  he 
expressly  contracts  to  the  contrary;  and  that  any  acceptance  by 


[86] 

him  of  compensation  at  common  law  shall  bar  him  from  all  ben- 
efits to  the  compensation  provided  in  the  act.  Or  it  might  be 
made  elective  in  form,  with  the  same  penalties  to  follow  an  elec- 
tion not  to  pay  the  compensation  provided. 

This  is  the  plan  proposed  to  the  IlHnois  commission  by  Mr. 
Harper,  its  attorney,  and  in  explanation  of  it  he  further  says: 

It  will  be  observed  that  this  plan  would  secure  to 
both  parties  their  constitutional  rights  of  due  process 
of  law  and  trial  by  jury,  with  a  penalty  added  for  the 
purpose  of  inducing  them  to  forgo  such  rights  and  accept 
the  statutory  compensation. 

I  am  of  the  opinion  that  this  plan  of  limitation 
upon  the  common  law  rights  of  the  parties  may  be  prop- 
erly included  in  the  form  of  a  proviso  in  the  compen- 
sation act  without  violating  that  provision  of  the  consti- 
tution, which  provides  that  no  act  shall  embody  more 
than  one  subject,  which  shall  be  expressed  in  its  title, 
because  it  is  manifest  that  the  modification  of  the  com- 
mon law  rights  of  the  parties  is  in  furtherance  of  the 
general  purpose  of  the  act,  viz;  to  provide  certain, 
definite  and  automatic  compensation  for  industrial  acci- 
dents.     Lamed  v.   Tierman,    I  1 0,  111.    I  73. 

It  will  be  equally  obvious  that  when  these 
common  law  rights  are  reserved  in  this  way,  the  other 
constitutional  questions  in  regard  to  taking  one*s  prop- 
erty without  due  process  of  law,  trial  by  jury,  unrea- 
sonable classification,  etc.,  are  practically  eliminated, 
because  the  act,  as  a  whole,  is  in  effect  elective  and  does 
not  rest  for  its  authority  upon  the  police  power  of  the 
state.  In  other  words,  if  the  reservation  of  the  com- 
mon law  rights  were  not  made,  the  act  could  find  its 
justification  only  in  the  police  power  of  the  state,  and 
this  would  involve  the  necessity  of  demonstrating  that 
any  classification  made  was  reasonable,  and  that  al- 
though the  property  of  the  employer  might  in  effect  be 
taken  away  from  him  to  compensate  the  injured 
employe,  there  existed  an  overruling  necessity  for  such 
action,  justifying  the  course  of  the  legislature  in  impos- 
ing this  burden  upon  him;  whereas,  under  a  bill  drawn 
as  above  suggested,  no  objection  could  be  made  on  the 
ground  that  the  act  was  not  due  process  of  law,  because 
the  courts  would  say  that  due  process  was  reserved  to 
him  by  the  act  itself,  and  no  vital  objection  could  be 


[87] 

made  to  the  classification,  because  if  the  act  is  in  effect 
elective  those  persons  covered  by  its  provisions  would 
have  the  right,  by  their  own  volition,  to  place  them- 
selves in  the  same  class  with  those  who  were  not  in 
terms  covered   by  the  act. 

VOLUNTARY  ASSOCIATIONS 

We  wish  to  present,  for  your  consideration,  a  suggestion 
that  voluntary  associations  be  organized  in  the  different  National 
Metal  Trades  Association  districts,  each  member  to  contribute 
his  fair  proportion  to  a  compensation  fund  of  such  a  size  to  prop- 
erly take  care  of  all  accidents  and  sickness  among  the  employes. 

In  this  way  we  could  do  away  with  the  necessity  of  legisla- 
tion and  soon  quiet  the  demand  for  it. 

CONCLUSION 

Owing  to  the  limited  time  which  we  have  had  to  devote 
to  this  subject,  and  the  extensive  scope  of  the  inquiry  and  the 
many  difficult  and  important  questions  of  economics,  policy  and 
law  involved,  this  report  is  not  an  exhaustive  treatment  of  the 
subject. 

>^e  have  endeavored,  however,  to  show  what  has  been 
accomplished  in  foreign  states,  what  has  been  accomplished  in 
this  country,  and  generally  within  what  limits  legislation  would  be 
warranted  by  law. 

It  is  obvious  that  nothing  in  the  way  of  reform  can  be 
accomplished  without  an  honest  effort  both  on  the  part  of  em- 
ployers and  employes  to  that  end,  and  in  view  of  the  fast  form- 
ing public  sentiment  in  favor  of  more  uniform  and  equitable  laws 
governing  the  relation  of  master  and  servant,  and  the  liability  for 
and  the  right  to  compensation  for  personal  injuries  growing  out 
of  that  relation,  we  believe  that  such  reasonable  legislation  as  may 
be  the  result  of  such  effort  will  be  given  that  construction  by  the 
courts  that  is  in  furtherance  of  the  plan,  and  in  the  interest  of  the 
common  good,  without  too  great  an  adherence  to  the  technical 
construction  of  the  present  law  relating  to  the  subject 

While  it  might  seem  desirable  for  this  committee  to  com- 
pile a  bill  which  would  secure  the  approval  of  the  Association, 


[88] 

it  would  certainly  be  very  difficult  to  perform  this  task  in  a  way 
which  would  be  acceptable  to  various  states  of  the  country  in 
which  the  membership  of  the  Association  is  found.  The  essen- 
tials have  been  dwelt  upon  in  this  report,  and  are  generally  cov- 
ered in  the  several  bills  which  are  being  considered  by  state  com- 
missions, or  in  some  cases  have  been  presented  for  legislative  action. 
The  committee  therefore  is  content  with  referring,  as  appendices 
to  this  report  proposed  bills  in  Illinois,  Minnesota,  Ohio,  Wiscon- 
sin, etc. 

In  conclusion  your  committee  members  will  say  that  they 
are  inclined  to  favor,  if  it  is  possible  adequately  to  secure  it,  a 
provision  in  the  acts  adopted  by  the  several  states  for  a  contribu- 
tion by  the  employe  to  the  cost  of  compensation,  not  so  much  for 
the  purpose  of  relieving  the  employer  of  a  part  of  the  cost,  as  for 
the  purpose  of  enhancing  the  amount  of  compensation  to  be  paid 
beyond  what  is  now  recognized  as  a  fair  proportion  to  be  borne 
by  the  employer  in  any  event,  and  for  the  purpose  of  giving  to 
the  employe  that  independence  and  that  interest  in  the  operation 
of  the  proposed  law  which  would  come  solely  from  the  fact  that 
the  compensation  was  furnished  in  part  by  his  own  contribution. 

Such  a  provision  is  highly  desirable,  but  under  the  law  in 
all  probability  must  be  provided  for  by  contract  between  the  em- 
ployer and  his  employe;  and  any  act  dealing  with  this  relation 
should  be  so  framed  as  to  recognize  and  encourage  the  making 
of  such  provisions,  and  when  so  made,  under  the  control,  however, 
of  some  proper  state  authority,  they  should  supersede  the  statutory 
provisions  and  stand  also  in  lieu  of  the  common  law  rights  and 
obligations. 

DATA  SECURED 

For  the  purpose  of  gathering  statistical  information  in  regard 
to  what  is  being  done  by  manufacturers  to  better  protect  their 
employes  and  themselves  against  accidents;  to  what  extent  they 
are  depending  upon  liability  insurance;  what  percentage  of  them 
belong  to  mutual  insurance  associations;  what  percentage  have 
established  employes*  aid  societies  or  have  adopted  other  insur- 
ance systems  for  the  benefit  of  their  employes,  etc.,  seven  classi- 


[89] 

fied  sets  or  groups  of  inquiries,  arranged  alphabetically  from 
*'A*'  to  *'G,"  were  sent  out  to  each  of  200  manufacturers,  and 
from  the  replies  received,  has  been  compiled  the  information  dis- 
tributed herein,  under  the  several  classified  headings. 

(A)  WHAT  METHODS  ARE  YOU  EMPLOYING 
IN  YOUR  ESTABLISHMENT  TO  PROTECT  YOUR- 
SELF AND  YOUR  EMPLOYES  AGAINST  ACCI- 
DENTS? 

Number  of  inquiries  sent  out,  200. 

Number  of  replies  received,    I  76,  or  88  per  cent. 

12  per  cent  did  not  reply  at  all. 

3  per  cent  were  too  indefinite  to  be  of  value. 

3  per  cent  stated  that  they  were  not  employing  any  methods 
for   purposes   stated    above. 

43  per  cent  reported  as  employing  the  usual  precautions, 
such  as  protecting  exposed  gears,  saws,  belts,  and  other 
dangerous  parts;  causing  notices  to  be  posted  and  advis- 
ing caution  on  the  part  of  all  employes. 

20  per  cent  indicate  that  they  depend  upon  some  form  of 
accident  or  liability  insurance   for  protection. 

7  per  cent  claim  to  employ  some  form  of  insurance,  also 
to  adopt  the  usual  safety  appliances. 

To  be  more  explicit,  some  of  their  replies  are  quoted  as 
follows : 

It  is  our  custom  to  furnish  hospital,  surgical  or 
financial  assistance,  but  such  actions  are  voluntary,  not 
compulsory. 

We  make  monthly  deposits  in  banks  to  an  emer- 
gency fund,  which  exceeds  the  amount  we  formerly  paid 
in  insurance  premiums.  We  adopted  this  plan  because 
the  insurance  companies  wanted  to  more  than  treble  our 
annual  premiums. 

We  pay  for  insurance  and  doctor  bills,  but  noth- 
ing for  lost  time. 

Periodical  inspection  of  plant  and  emergency  serv- 
ice. 


[90J 

General  accident  policy,  covering  employes  inside 
and  outside  of  shop.  For  death  by  accident  $  1 0,000. 
Total  liability  for  any  one  accident  $20,000. 

(B)  DO  YOU  CARRY  LIABILITY  INSURANCE? 

Replies  were  received  from  98  per  cent  of  the  manufac- 
turers to  whom  inquiries  were  sent. 

87  per  cent  of  the  replies  were  in  the  affirmative. 

1  1  per  cent  replied  '*no.** 

2  per  cent  stated  that  they  carried  their  own  liability  insur- 
ance. 

One  of  the  latter  states  in  explanation  that  under  the  old 

method  of  liability  insurance,  while  the  first  aid  was  always 
allowed,  a  question  in  regard  to  compensation  for  loss  of  time 
usually  arose,  causing  dissatisfaction  among  the  employes.  For 
the  past  year  they  have  been  carrying  their  own  accident  insur- 
ance and  report  results  as  follows: 

We  give  first  aid  and  further  aid  if  necessary,  al- 
lowing either  half  or  full  time,  according  to  the  nature 
of  the  accident.  The  cost  has  been  less  and  results 
more  satisfactory. 

One  manufacturer  reports  that  their  liability  insurance  has 
been  discontinued  since  August,  1910,  but  does  not  make  any 
further  explanation.     Another  replies;  "No — except  boiler  insur- 


ance.** 


(C)  IS  THERE  AN  EMPLOYES'  AID  ASSOCI- 
ATION CONDUCTED  IN  CONNECTION  WITH 
YOUR  ESTABLISHMENT? 

L   Is  membership  in  such  association  compulsory?     If  not, 
what  proportion  of  your  employes  is  affiliated  with  your 

association  ? 

2.   Does  your  company  contribute  to  the  support  of  such 
aid  association?     If  so,  to  what  extent? 

RepHes  were  received  from  197  manufacturers  and  show 
that  51  companies,  or  26  per  cent  of  the  197,  do  have  employes* 
aid   societies   conducted   in   connection  with   their   establishments. 


[9i] 

while  74  per  cent  do  not. 

Only  1 5  per  cent  of  those  having  such  associations  state  that 
membership  is  compulsory.  The  other  87  per  cent  who  do  not 
compel  such  membership,  claim  that  57  per  cent  of  their  employes 
are  affiliated  with  the  societies. 

Of  the  51  companies  referred  to  above,  29,  or  57  per  cent, 
do  not  contribute  to  the  support  of  the  association. 

Twenty-two  companies,  or  43  per  cent,  do  contribute,  but 
do  so  in  such  diverse  ways  and  varying  amounts  as  to  preclude 
the  possibility  of  computing  the  amounts,  on  a  percentage  basis, 
or  deducing  a  comprehensive  analysis  of  the  value  and  equity  of 
their  contributions,  as  shown  by  the  replies  recorded  below: 

Some  companies  claim  to  contribute  10  per  cent  of  the  total 
disbursements  made  by  the  association. 

Others  contribute  amounts  ranging  from  20  per  cent  to  75 
per  cent  of  the  total  disbursements. 

Another  contributed  $500  to  start  with. 

Some  pay  a  percentage. 

Others  pay  all  liabilities  of  the  association  in  excess  of  dues 
collected. 

The  following  are  some  explanations  received: 

We  pay  an  amount  equal  to  one  week's  wages 
for  each  year  a  man  has  worked  for  the  company  as 
part  of  death  benefit. 

Contribute  for  accidents,  not  sickness. 

We  pay  all  operating  expenses  of  the  associa- 
tion and  for  medical  attendance. 

We  pay  wages,  hospital  and  doctors*  bills. 

We  replenish  treasury  when  funds  run  low. 

Our  employes*  aid  association  was  discarded  when 
our   insurance   plan   was   adopted. 

(D)  HAVE  YOU  ESTABLISHED  AN  INSUR- 
ANCE  SYSTEM  FOR  THE  BENEFIT  OF  YOUR 
EMPLOYES? 

1.  What   does   the   insurance   cover? 

2.  Does  it  cover  a  sick  benefit? 

3.  Does  it  pay  any  certain  amount  for  certain  risks? 


[92] 

4.  Does  it  pay  death  benefits? 

5.  Does  the  employe  contribute?     If  so,  how  much? 

6.  Does  the  company  contribute?     If  so,  how  much? 

One  hundred  and  ninety-two  repHes  were  received,  or  96 
per  cent  of  a  possible  200.  Twenty-six  companies,  or  about 
1 4  per  cent  of  all  who  replied,  claim  to  have  adopted  some  insur- 
ance system  for  the  benefit  of  their  employes,  and  from  their 
replies  the  following  answers  are  compiled: 

1.  Each  system  covers  one  or  more  of  the  following  liabil- 
ities; accidents,  sickness,  disability,  death,  pensions. 

2.  62  per  cent  of  their  systems  cover  sick  benefits. 

3.  3 1    per  cent  pay  a  certain  amount,  for  certain  risks. 

4.  80  per  cent  pay  death  benefit,  but  two  of  them  specify 
for  accidental  deaths. 

5.  80  per  cent  require  their  employes  to  contribute,  but 
no  uniform  basis  or  system  for  computing  such  contri- 
butions seem  to  have  been  adopted. 

Three  of  the  systems  require  employes  to  pay  all. 

Three  of  the  systems  require  employes  to  pay  75  per  cent. 

Two  of  the  systems  require  employes  to  pay  from  20  per  cent 
to  90  per  cent 

One  of  the  systems  requires  employes  to  pay  1  per  cent  of  earn- 
ings, not  to  exceed  30c  per  semi-monthly  payment 

One  of  the  systems  requires  each  employe  to  pay  50c  per  month. 

6.  62  per  cent  of  the  companies  also  contribute.  Some 
of  them  the  clerical  work;  others  make  up  deficits,  if 
any. 

Eight  of  the  26  companies  contribute  50  per  cent  or  less  of 
the  cost  of  their  respective  systems. 

One  contributes  $1,500  annually. 

One  contributed  $500  to  start  with. 

One  contributes  50c  per  month  per  employe. 

Five  pay  all. 

Six  do  not  pay  anything. 

(E)  DO  YOU  HAVE  A  PENSION  SYSTEM? 

1.  If  so,  on  what  plan  is  it  run? 

2.  What  does  it  cost? 


[93] 

3.   Does  the  company  stand  all  or  part  of  the  cost? 
There  were  1 90  repHes  to  the  200  inquiries. 

Only  five  companies  report  as  having  adopted  pension  sys- 
tems, and  little  additional  information  is  obtained  from  their 
replies  except  the  fact  that  more  than  97  per  cent  of  them  have 
not  adopted  pension  systems. 

Ihe  following  is  taken  from  replies  received: 

1.  Two  companies  base  pensions  on  earnings  and  length  of 
service.  One  company  varies  pension  according  to  needs. 
The  remaining  two  companies  do  not  furnish  any  infor- 
mation in  regard  to  plan  on  which  their  pension  systems 
are  run. 

2.  Only  one  company  gave  information  in  regard  to  cost, 
viz:  **At  present  we  have  28  pensioners,  whose  pen- 
sions run  from  $20  to  $55  per  month,  making  the  total 
cost  per  month,  about  $649.** 

3.  Four  of  the  above  companies  pay  all  the  costs;  the  other 
company  does  not  state. 

Some  of  the  replies  were: 

We  keep  the  old  men  on  as  long  as  they  can  come 
to  work.     So  far,  all  have  died  in  the  harness. 

We  endeavor  to  keep  old  employes  on  easier  work. 

(F)  IS  THERE  A  RECORD  KEPT  OF  THE 
NUMBER  OF  ACCIDENTS? 

1 .  If  so,  what  was  the  cost,  either  in  voluntary  payments,  or 
as  a  result  of  lawsuits? 

Replies  received  from  81   per  cent  of  the  200  inquiries. 

Sixty-two  per  cent  report  that  they  do  keep  records  of  acci- 
dents. Thirty-eight  per  cent  do  not  keep  such  records,  except  of 
notices  sent  to  the  insurance  companies.  One  report  states  explic- 
itly, **$31   yearly  average  for  the  past  three  years.** 

Reports  from  34  manufacturers  show  their  combined  costs 
for  accidents  in  one  year  to  be  $22,333.24,  an  average  cost  per 
company  of  $656.86  per  year. 


[94J 

Another  group  of  192  accidents,  cost  seven  companies 
$3,256.18,  an  average  of  about  $170  per  company  per  year, 
but  the  actual  cost  to  each  of  the  several  companies  varied  from 
$2  to  $364.30  per  year. 

One  company  paid  in  one  year  for  271  accidents  and  one 
accidental  death,  $3,258.10,  but  the  amount  paid  for  the 
accidental  death  was  not  given  and  as  their  death  benefits  are 
based  in  part  on  the  earnings,  and  such  benefits  range  in  amounts 
from  $480  to  $4,000,  it  is  impossible  to  compute  the  cost  of  the 
271   accidents  from  the  information  at  hand. 

Replies  from  several  manufacturers  indicate  that  they  have 
been  unable  to  obtain  from  their  insurance  companies,  informa- 
tion in  regard  to  actual  amount  of  payments  made  to  their  em- 
ployes by  the  insurance  companies. 

(G)  DO  YOU  BELONG  TO  ANY  MUTUAL 
INSURANCE  ASSOCIATION? 

1 .  If  so,  please  advise  results. 

2.  Are  you  operating  under  state  law?     If  so,  please  favor 
us  with  an  expression  of  your  opinion  in  regard  to  it. 

Replies  received  from  1 76,  or  88  per  cent  of  the  200 
inquiries  sent  out. 

It  should  be  explained  that  the  above  inquiry  had  reference 
to  local  mutual  insurance  associations,  organized  by  the  manu- 
facturers in  their  respective  localities. 

Six,  or  less  than  3!/2  per  cent  of  all  who  replied,  belong  to 
local  mutual  insurance  associations. 

1.  All   companies   belonging   to   mutual   insurance   associa- 
tions, report  results  as  satisfactory. 

2.  All  but  one  of  them  are  operating  under  state  law. 

Their  opinions,  as  expressed  in  relation  to  state  laws,  are 
in  part  as  follows : 

Members  working  under  New  York  law  report 
it  as  being  favorable,  while  other  New  York  members 
say  their  compulsory  liability  law  is  only  partially  sat- 
isfactory. They  do  not  think  the  employer  gets  a 
square  deal. 


[95J 

The  Illinois  law,  which  requires  that  accidents  be 
reported  to  the  state,  is  said  by  some  members  from 
that  state  to  be  satisfactory  when  they  experience  no 
serious  complications  to  be  reported. 

The  New  Jersey  members  reporting  say  they  con- 
sider the  state  law  unjust  and  very  imperfect. 

Much  information  may  be  obtained  from  the  replies  and 
suggestions  received  from  these  200  manufacturing  companies. 
First,  that  they  reveal  the  usual  display  of  diverse  opinions  to  be 
expected  from  such  a  large  number  of  dissimilar  institutions, 
located  in  so  many  different  sections,  established  among  different 
environments,  each  company  with  its  personnel  and  character- 
istics peculiar  to  itself,  kind  and  locality,  all  of  which  help  to 
establish  their  basis  of  thought  and  influence  their  conclusions. 

One  important  lesson  is,  that  many  manufacturers  are  not 
giving  due  consideration  to  the  first  of  the  subjects  treated  herein. 
That  is,  they  are  not  providing  newer  and  better  methods  for  the 
protection  of  themselves  and  their  employes. 

Many  appear  to  adopt  such  methods  as  are  recommended 
by  the  insurance  companies,  or  their  inspectors.  Others,  only 
such  as  are  prescribed  by  local  ordinances,  or  state  laws,  for  the 
prevention  of  accidents,  and  endeavor  to  protect  themselves 
against  pecuniary  losses  by  liability  or  other  forms  of  insur- 
ance, devised  for  similar  purposes.  Some,  however,  are  work- 
ing along  newer  and  broader  lines,  employing  methods  which  con- 
servation and  experiments  have  shown  to  operate  for  the  mutual 
good  of  the  employe  and  employer,  both  sharing  in  the  costs  of 
the  systems  they  adopt. 

Some  manufacturers  have  not  kept  any  records  of  acci- 
dents in  their  factories;  others,  only  records  of  reports  of  acci- 
dents sent  to  the  insurance  companies,  and  few  of  such  companies 
have  accurate,  if  any  records  of  cost  pertaining  to  accidents. 
This  is  especially  true  of  those  manufacturers  buying  insurance 
protection. 

Barring  extraordinary  accidents,  it  should  be  as  easy  for  a 
manufacturer  to  tabulate  such  records,  or  keep  an  accurate 
account  of  the  amount  of  their  contributions  to  an  employes*  bene- 
fit insurance  system,  as  to  figure  his  factory  overhead  costs. 


[96] 

MEMBERSHIP  AND  EMPLOYES'  BENEFIT  INSUR- 
ANCE ASSOCIATIONS. 

One  of  our  members  says: 

It  does  not  seem  reasonable  to  expect  an  employe 
to  accept  with  very  good  grace  an  arbitrary  decision  that 
he  must  become  a  member  of  a  certain  organization,  in 
subscribing  to  which  he  has  but  two  courses  of  action, 
in  case  of  accident;  that  is,  either  to  accept  the  award 
of  the  association  of  which  he  is  a  member,  or  have 
recourse  to  the  courts;  but  if  membership  is  optional 
with  him,  he  may  be  justly  and  successfully  taught 
that  by  his  membership  he  helps  to  complete  a  benevo- 
lent entity,  of  which  he  is  an  integral  part,  assuming 
his  share  of  the  moral  and  financial  obligations  of  an 
association,  a  large  percentage  of  the  benefits  of  which 
accrue  to  him  or  those  who  may  be  dependent  upon 
him. 

It  will  be  noted  from  the  answers  to  question  **6,**  that 
where  membership  is  voluntary,  only  57  per  cent  of  the  employes 
join,  and  it  is  very  common  in  case  of  accident  or  sickness  to  an 
employe  who  is  not  a  member  to  have  a  subscription  paper  passed 
around  in  the  shop.  This  is  very  unsatisfactory  and  unfair  to  the 
men  who  are  paying  dues  to  the  insurance  association.  Com- 
pulsory payment,  by  bringing  in  all  the  men,  makes  the  cost 
per  man  very  much  less  and  enables  the  association  to  extend  the 
benefits. 

It  is  suggested,  as  the  belief  of  one  manufacturer,  that  the 
whole  employer's  liability  agitation  is  a  direct  movement  toward 
socialism.  If  this  be  true,  it  is  high  time  that  all  employers  of 
labor  were  co-operating  in  a  general  effort  to  formulate  some  uni- 
form policy  or  system,  which  shall  be  elastic  enough  to  operate 
equally  well  for  all  manufacturers,  large  and  small,  and  so  safe- 
guard and  protect  the  mutual  interests  of  employer  and  employe, 
as  to  satisfy  both. 

It  is  suggested  that  the  general  government  should  support 
a  needy,  disabled  or  infirm  employe,  because  such  burdens  should 
be  borne  by  the  public  and  not  by  employers. 

No  method  has  been  so  productive  of  good,  no  charity  so 
kind  or  helpful  as  that  of  "helping  others  to  help  themselves," 


[97] 

and  this  should  be  one  of  the  basic  principles  employed  in  the 
working  out  of  this  problem.  A  very  few  people  willingly  become 
subjects  of  charity  and  most  of  them  rather  give,  than  receive 
alms.  It  seems  reasonable  to  assume  that  a  system  for  the  main- 
tenance and  operation  of  which  both  employers  and  employes 
should  contribute  their  proportional  part  of  the  cost,  labor  and 
responsibility  could  be  devised. 


,  >•  J  .  ,  ,  ,  ) , 


•     •'*»  .*>    *****     •    • 


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